You’re sifting through the mail, and right away you recognize the return address. And you already know what’s coming next. It’s time to renew your lease, and they’re going to increase your rent.
You expected an increase, but you’re shocked by the amount. Your rent is going up by $100 per month. Now you get angry. You’ve always paid your rent on time, and you’re a good tenant.
Your first thought? It’s time to move. Then you remember how much you love the neighborhood. Is the location worth $1200 more a year though? You think back to how hard it was to find an apartment you could afford last year. Your emotions are all over the place.
Before you search for a new apartment or send an email to your landlord that you might regret, consider that what seems like an unreasonable rent increase right now, may not be as bad as you think. And you might even be able to negotiate the terms of the new lease.
Here are six questions to ask yourself before you lose any sleep over your new rent increase!
Do You Want To Stay?
Have you already thought about moving at the end of your lease?
If you’ve questioned living there for another year, paying over a thousand dollars more might not make sense. But remember – if you really wanted to move, you probably wouldn’t be too shocked or angry about the rent increase. And you would have been looking for a new place before your lease renewal showed up.
Unless your mind is made up, make sure you consider the pros and cons of staying and the costs related to moving.
Will moving increase your commuting expenses? You may not be friends with your current neighbors, but what will your new neighbors be like? Do you need a bigger apartment? Will the same utilities be included in a new place? Will you have to rent a moving truck or take time off of work to move?
If you’ve decided to move, you don’t need to worry about negotiating the rent increase. But if you have any doubts, do your homework and look at the numbers for your specific situation. And keep reading!
Who Will You Negotiate a Rent Increase With?
It’s important to understand who you will be talking to about your rent increase.
Landlords who only own a few investment properties may consider discussing terms of a lease. The nature of their small business may make them more interested in occupancy rates and rents coming in, than renovating a unit and finding new tenants.
If a large company manages your apartment, they’ll probably be less likely to budge on the rent. One idea? Talk with other tenants to make sure your rent increase is similar to what’s happening with your neighbors. And remember, just because they are a big company doesn’t mean you shouldn’t try to negotiate!
Is the Rent Increase Justified?
Think back to signing your lease. Did you get a special move-in rate? Was the rent discounted because of the time of year? Keep in mind that you may not have been paying market rent during that first year. The increase this year may just be moving your rent to market rate.
You should also consider if taxes have gone up significantly in your area or if the landlord has made improvements to the property. These are other reasons landlords use to justify rent increases.
Now is the time to research apartment availability, rents, and the amenities available in the areas where you would like to live. Is it a “hot” market? Or are there open apartments in a variety of locations in your target area?
If you can’t find a similar apartment for less than you’re paying, the increase is likely justified.
Not sure where to look to find other apartments? Try a few of the following options:
- Facebook marketplace in your area
- Local newspaper/online classified ads
- Pennysaver print/online
- Local university housing listings
Can you afford the new rent?
It’s time to look at your budget and expenses. If you can easily afford the rent increase, that doesn’t mean you shouldn’t look at the impact it may have on your savings rate or your ability to increase the amount you invest.
If you are already struggling to pay your bills, where will another $100 come from each month? Can you cut back on some of your spending to pay the rent? Do you have the option to work overtime each month or pick up a second job or side gig to cover the increase?
You certainly don’t want to go into debt using your credit card to pick up expenses that you usually paid with that $100 each month!
Think about what you can really afford and come up with a specific rent amount that you can pay. When you are ready to negotiate, use that number and explain any circumstances related to it. Can’t work a second job because you are caring for aging relatives? Share that.
Being honest with your landlord may make a difference in whether they are willing to negotiate.
Are you willing to do something extra or give something up?
Rather than merely negotiating a rent reduction, are you willing to do something in exchange for paying less? Will you clean the common areas? Are you willing to do some yard work or shovel in the winter? You can also ask if there is anything the landlord needs done, that you can take on to reduce your rent.
Will you give up your off-street parking space or a second space you don’t need? Maybe your landlord can rent that to someone else to make money.
Try to think of other perks that you would give up that might save your landlord money or time and include those in the negotiation too! If your landlord agrees, you might consider giving up a one-year lease and signing an extended one. This will lock-in your new rent and prevent increases for the term of the contract.
Are you willing to move?
If you can afford the increase and you really don’t want to move, you might not feel it’s worth the effort to negotiate. But don’t make the mistake of assuming your landlord won’t negotiate the increase.
Instead, take the time to respectfully ask for a reduction to an amount you think is reasonable to pay. If they say no, at least you know you tried.
If you are willing to move and know that you can find another apartment you’ll be happy in; you probably feel you can negotiate harder. But harder doesn’t mean you should threaten to move or be unrealistic in your demands.
Make your case by writing a detailed letter to your landlord that explains the research you have done. Try to keep it brief and to the point. Tell them the exact rent you are willing to pay and what you are willing to do (or give up), to sign a new lease.
And tell them that you will call within a week to discuss your request. Then mark your calendar and make that call. Hopefully, a win-win solution will be the result of all of your hard work!
It’s Time to Decide
Now that you’ve thought more deeply about your rent increase and you’ve taken action to research other options and negotiate with your landlord, you can decide where to live.
If the landlord or management company knows they can rent your apartment at a higher rent than you are paying, they probably won’t consider your request. But you’ve done the work, and you are a more educated consumer now too!
This is also an excellent time to think about what kind of tenant you are (or want to be.) Do you always pay your rent on time? Do you call for simple repairs that you could have taken care of yourself? Are you just using your living space or are you working to maintain or improve it?
It may not matter to this landlord, but the “ideal” tenant sometimes ends up with a long-term lease at below-market rates. They also get excellent references from their landlords when the time comes to move.