Your lease is coming to an end, and you’re faced with the choice to stay put and renew with your landlord or start searching for a new place. But when your landlord or property manager notifies you that your rent will be going up if you stick around, that higher rent may be making the decision for you.
In a housing market where apartment buildings are being constructed quickly, leasing agents and landlords must be competitive to attract tenants – in some cases adding amenities like on-site dog parks and concierge services and offering concessions like a waived security deposit or paid-for moving expenses.
Still, all this new construction doesn’t meet the needs of the current nationwide housing shortage. Especially if you already live in a pricey city or metro area, rents continue to climb. In a study of average monthly rentsin July 2018 for 130 ZIP codes throughout the U.S. by RENTCafé, a rental information company and subsidiary of Yardi Matrix, 38 of the 50 most expensive ZIP codes had year-over-year rent price growth.
How can you avoid taking on unmanageable rent increases imposed by your landlord? It’s an uphill battle, says Nat Kunes, vice president of product at AppFolio, a full-suite property management software company: “You don’t typically have a lot of leverage as an existing tenant.” But you do have a few options to negotiate with your current landlord, trim your monthly costs in other ways or simply start looking for a better deal with a different landlord elsewhere. Here are five options.
Move within the building. If you’re already stretched thin in your one- or two-bedroom apartment where you don’t actually need the space, inquire with your landlord about smaller options available in the building.
Studio and efficiency apartments typically don’t lease as well as units with separate bedrooms, says Doug Ressler, director of business intelligence for Yardi Matrix. “The market rate for studios is not as vibrant as the larger apartments,” he says.
One possible reason for this lower demand is the fact that tenants are less likely to live long-term in a studio, or they may opt to live with roommates to afford the larger space or a better location, Ressler says.
If your landlord has vacant studios, offering to take the space and free up a larger apartment that’s easier to rent means you’ll be dealing with lower rent and your landlord may be willing to provide a couple of concessions, such as free moving help or waiving application fees or background check costs since you’re already a tenant.
Sign on for a longer lease. Your best bet for lowering your monthly rent while staying in the space is to offer to guarantee to your landlord that you’ll be there for a while. “The main bargaining chip that tenants have upon renewal is how long they re-up for,” Kunes says.
Rather than letting your lease transition to a month-to-month agreement, “if you sign another six-month or 12-month lease, you might get discounted rent off of that, so that’s where you’re typically seeing the negotiating power from,” Kunes says.
If you’re a fan of the building and plan to be around awhile, an 18-month or two-year lease can guarantee a stable, lower monthly rent for a period. But don’t sign a two-year lease if you know you won’t be staying the full term. Breaking your lease isn’t always easy – or cheap – and your landlord will be less likely to help you if you’re creating a vacancy that wasn’t supposed to happen.
Ask for different perks. Landlords aren’t always willing to budge on rent in a lease renewal, but you may be able to offset base rent costs with other perks or concessions.
Kunes says he’s seen landlords offer long-term tenants a new appliance in the apartment, and at the end of the lease term it’s the tenant’s to keep. For example, “Here’s a brand-new fridge – you can take that with you at the end of the lease term,” he says. If your next place provides all appliances, you can simply sell your slightly used one for a profit, or keep it if providing your own appliances is necessary, which is often the case with single-family house rentals.
Bring in a roommate. You may be hard-pressed to find a roommate willing to share a studio or small one-bedroom apartment. But if you’ve got an extra bedroom or den that can be converted for another person’s use (and your lease allows it), you can cut your rent in half.
Even if getting a roommate requires you to move to a larger unit in the same building, the landlord may be willing to provide additional concessions for taking a unit that may be harder to lease. And even with a higher overall rent, splitting it in half also means your utilities and internet costs are halved – and you’ll likely see your total cost of living go down.
Move somewhere else. You may not have enjoyed your renting experience in your current place, or your landlord simply may be unwilling to budge on rent increases to renew. When that happens, take a look at your options to move somewhere else.
Rents may be climbing, but be sure to factor in potential savings through concessions that may offset your total cost of living. Traditional concessions come in the form of a month of free rent for new tenants or a waived security deposit. Other concessions rising in popularity cater to the individual renter.
“Especially in high rent-growth areas, they’re high-rent growth because they are competitive for tenants, so tenants are motivated to get in quick and close the deal,” Kunes says. “This is just a little sweetener on top to get them to lock in with that particular property quickly.”
Kunes says landlords and property managers are finding out what prospective tenants’ interests include after getting to know them and offering concessions accordingly – six months of free weekly yoga classes, for example, or a few months of free daily dog walks if the renter has a dog.
“What it does is create a great experience for tenants at the property,” Kunes says. “It differentiates the property management firm in the eyes of the tenants and sets them up for a great relationship ongoing.”
Weigh your options with the footprint of your next apartment as well. Newer apartment communities tend to have smaller individual units, which Ressler says is a developer strategy to fit more people in the building and reduce the need for astronomical rent increases.
“Right now, the density is such that says, ‘If I’m going to house X amount of people in a given property, if I can house a greater number, then I don’t necessarily have to raise the rents on a smaller, lesser number [of residents],” Ressler says.
A building with smaller apartments rarely means the switch from sprawling loft to micro-unit, and many renters don’t miss the loss of 100 square feet or so in exchange for steadier rent, more amenities and a newer building.
By Devon Thorsby, Staff Writer |Aug. 31, 2018