How Do You Negotiate Rent
With the rising cost of inflation and upcoming recession predicted, it's no surprise that rent prices are also skyrocketing. Since 2019 rent prices have increased 11.7 percent, and in some metropolitan cities, the increase surpassed 20 percent. It's tough to predict how much your rent will increase; however, there are a few tips and tricks you can use to prepare for rent negotiations with your landlord/leasing office.
How to Negotiate Rent
There is no exact formula to negotiating your rent, as everyone's circumstances, landlord, and living situations are different. However, suppose this is your first-time negotiation, or your last few negotiations didn't go as you expected. In that case, there are some key rules and tips you should consider implementing.
Step 1: Know What You Want
One of the essential pieces of information that should come out of your market and neighborhood research is the price you are willing and comfortable with paying. If you go into your negotiations without a number in mind, you are relying on the landlord and their market research, which is often biased toward a higher number.
When doing market research on your area, it’s great to use sites such as Zillow, Craigslist, Apartments.com, and Streeteasy to understand what similar apartments are renting for and the rental record from previous years. After your research, you should consider the ideal price (within reason) you would pay for an apartment. It's best to set a range you could work within; think of a number lower and higher than your perfect rental cost.
Your initial negotiation offer should be on the lower end of your price range. This way, you can get a feel for how low your landlord is willing to go. This will give you some wiggle room to increase your counter offer without exceeding your budget.
Other Things to Negotiate
Aside from the actual rent cost, there are other ways to decrease your bottom line cost (amenities, parking, storage facilities, etc.). If your landlord is set on not budging with the rent cost, you should make a secondary list of apartment expenses and fees and try to negotiate a lower or waived fee.
Step 2: Make Your Offer Mutually Beneficial
Going into the negotiation process, you have to be aware that the landlord will not lower the rent because you asked nicely; you should offer something that aids their bottom line — making more money. Typically landlords are willing to offer a lower rent for these reasons:
- Prepay months in advance
- Signing an extended lease
- Offer to extend the lease termination notice (from 30 to 60 or 90 days)
- Make a deal for referrals to increase building occupancy
Although the above options have been proven to be effective means of negotiation, experts recommend that signing an extended lease should be your first line of defense. The landlord makes more money by offering a longer lease at a lower cost. At the same time, you have a lower monthly cost, which achieves the primary goal of both parties involved.
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Step 3: Know When to Negotiate
Timing matters when it comes to negotiation. There are times when it's a buyer/renters market, and the landlord has a high rate of vacancies. There are also periods when it's a landlord's market: vacancy is low but demand is high, leading to higher prices. Knowing who has the upper hand in the market is a great first step to predicting how negotiations will play out. This will give you an idea of how low the landlord will go or how firm the listed rent price is.
The second factor to consider is when your lease is expiring. As it gets closer to your lease expiration, your landlord will do what they can to keep you as a tenant. The turnover rate to find a new tenant can significantly hurt a landlord’s bottom line. Ideally, you want to negotiate 2-3 months before your lease expires.
It's important to note that you should have your lease renewal offer or lease termination notice at least 90 days before the actual expiration date. By law, if your landlord does not provide you with a 90 days notice, you should include that in your lease negotiation for a lower rental price.
Step 4: Have the Right Information/Script Ready
When it comes time to negotiate, you should have all your research and information ready and prepare what you plan to say. Ideally, you want to speak to your landlord in person so that they can recall your tenant history. It's also crucial to discreetly remind them that you're a good tenant, enjoy living in the building, etc. The key to an effective negotiation is the be polite but firm with your request. Below are three scripts you can use in person or via email if your landlord cannot see you in person.
If renewal is sent in less than 90 days:
Hi [Landlords Name],
Thanks for sending over the renewal. However, I expected the increase to be less than 5% since we've passed the XX-day notice window. I'd love to stay, but I'm hoping we can agree on a renewal of $$$$ instead.
Providing Market Comparison:
Hi [Landlords Name],
Thanks for sending over the renewal. I was surprised by the new rent because similar #-bedrooms in the area are renting for around $$$$. I understand the market has changed since last year, but given my good standing as a tenant, I'd love to meet somewhere in the middle. Could we make $$$$ work?
Thanks for your consideration.
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Proactive Outreach Before Renewal is Sent
Hi [Landlords Name],
I hope all is well. I wanted to send a note as my lease is expiring in # months, and I'd love to get some clarity on the renewal. I've enjoyed my time in this apartment and would love to stay another # year(s). Given my good standing as a tenant, could we renew at the same rate? Happy to sign a renewal now if we can come to an agreement.
Thanks for your consideration.
While preparing to negotiate and feel a little nerve-racking and weird at first, it's essential to practice in a low-stakes environment before you go straight to your landlord. Utilize your friends, family members, or roommate to run through your script, tactics, wants, needs, and non-negotiables. The more your practice, the more comfortable you can be with the process, and stay firm on what you're looking to get out of the conversation.
Understanding the Rental Market
Especially in large metropolitan areas, the COVID-19 pandemic caused rent prices to fall to record lows and the amount of inventory (available apartments) to substantially increase. This led many people to rent larger properties or units in more expensive neighborhoods. As the rental market is bouncing back quicker than expected, the same tenants are experiencing shock as landlords raise the rent by 50 percent or more of the current rental cost. Although large cities have experienced the highest rent increase burden, high inflation nationwide has increased rent prices across every state – even in suburban areas.
When you receive your lease renewal offer, it's important not to panic. You can take steps to understand the market better and effectively negotiate with your landlord for a lower renewal rate. First, it's crucial to understand the current rental rate in your state or city compared to the previous average rental cost. Knowing the rental price from years prior will allow you to calculate a more accurate range and average pricing in years prior to COVID-19.
The following chart compares the average 2020 and 2020 rent costs in major cities across the United States.
Average Rent Cost (2020 and 2022)
|State||Average Rent 2020||Average Rent 2022|
|District of Columbia||$2,358||$3,000|
Source: World Population Review & Experian.com
The chart below shows the average rent cost in major United States cities. The price listed accounts for a standard one-bedroom, one-bathroom apartment or condo.
Average Rent Cost Major U.S Cities (2020 and 2022)
|City||Average Rent 2020||Average Rent 2022|
|New York City||$2,900||$4,000|
Based on current projects, the rental market has shown no signs of decline or stagnation. With the upcoming recession, cheaper apartments will be a hot commodity. However, understanding your rights as a tenant and the basics of the housing market and rent negotiations can save you from moving costs and bidding wars. It's never too early to anticipate a higher renewal rate. Being proactive with your research can be used as negotiation leverage.
Nationwide inflation is increasing the cost of most goods, from gas prices and groceries to rent and healthcare. Saving money and decreasing overall cost has never been more critical as we prepare for the recession. When it comes to healthcare, decreasing cost but maintaining quality and access is essential. With Mira, members get access to low-cost urgent and virtual care, same-day lab testing, and discounts on prescriptions for an average of $45 per month. Sign up today!
Originally from Houston, Texas, Alexandra is currently getting her Master's in Public Health with a health policy certificate at Columbia University. One of her life goals is to own her own art gallery!