Content of the material
- 1. Its a tough market for landlords. Use that to your advantage
- 2. Keep in mind that an independent landlord might negotiate differently than a property management company
- 3. Think about anything else you might be able to offer
- Research the property’s value
- 7. Highlight your strengths as a tenant to negotiate a lower rent
- How to negotiate rent as an existing tenant
- 4. Assess what a reasonable rent reduction would be
- Reasons to negotiate rent
- 1. Saves money
- 2. Strengthens relationship
- 3. Provides learning opportunity
- 4. Instead of negotiating for a lower rent payment, try asking for other perks, like free parking or free storage space
- 5. Experiment with the lease terms
- How much of a reduction should you ask for?
- It can’t hurt to negotiate rent
1. Its a tough market for landlords. Use that to your advantage
Now is a great time to sign a new lease, Allia Mohamed, CEO of openigloo, a startup that gathers public information on New York City buildings and landlords to help renters make their housing decisions, tells CNBC Make It.
"Before [covid], things were a bit different," Mohamed says. "People would offer more money to secure an apartment before someone else. Now, there's more options on the market and renters have choices."
While negotiating might have once landed your application in the reject pile, it is now something landlords will engage with, particularly in cities that saw large chunks of their populations flee to the suburbs.
"I think pre-pandemic, landlords didn't expect you to negotiate, especially when there was a line of people waiting for an apartment," Mohamed says. "In these conditions, negotiating your rent is so common that almost everyone is trying to do it."
Renters who want to renew their current lease have the most leverage, Mohamed explains, because landlords would rather avoid foregoing rent while they clean, paint and do repairs on an empty unit.
"Assuming you're a good tenant and you pay your rent on time, the landlord should be trying to keep you in the apartment," she explains. "Being in that position gives you a little bit more leverage than normal."
2. Keep in mind that an independent landlord might negotiate differently than a property management company
3. Think about anything else you might be able to offer
If you have enough cash, consider offering several months' rent up front. Landlords may be willing to give a rent discount to tenants who can offer them more money right away.
"A lot of landlords are strapped for cash because a lot of renters are behind on their rent," Mohamed says. "If you can offer it, it's a popular tactic."
Proposing a lease longer than 12 months may also make landlords more willing to accept a lowball offer, she adds.
"Landlords are in a position in a lot of places where they want to secure that rent payment every month. If you're in a position in your life where you can commit to an apartment for two years, definitely use that as a negotiation tool," Mohamed says.
Research the property’s value
Consider if the rent is beyond the actual worth of the prevailing market. Research rent rates by talking to other landlords or neighbors in the area. Knowing average property prices and frequency of rent hikes in the neighborhood may give you leverage.
7. Highlight your strengths as a tenant to negotiate a lower rent
If the rent reduction offered by your landlord is too low, one of my rent negotiation tips is to highlight your strengths as a tenant. When thinking about how to negotiate rent, keep in mind that being a good tenant can go a long way.
Your strengths as a tenant can include always paying your rent on time, alerting your landlord fast when something breaks or needs fixing, taking good care of your apartment, being a good neighbour and never having had a noise complaint against you. I would recommend putting those situations forward when negotiating a lower rent.
How to negotiate rent as an existing tenant
Admittedly, negotiating rent for an apartment you already live in is a bit harder (but not impossible). The biggest obstacle to overcome is the lack of leverage; you already live there, so why should your landlord drop your rent now? It’s all about how you frame the negotiation.
For starters, everyone’s life would be a bit easier if you just stayed. Assuming you’ve been a good tenant, your landlord likely wants to keep you around. You probably don’t want to deal with the hassle of moving out, either. With that in mind, it’s in both parties’ best interest to come to an agreement.
Here are the steps to take when negotiating lower rent as a current resident:
- Do your research
Before doing anything else, is to see what the rent is for comparable apartments in your area. If you find that other places in your area are renting for less, start making a list of examples. The more data you have, the better. Obviously, if you find that you are already paying much less for your unit than the norm for your area, you may not have much luck in negotiating.
- Put your request in writing
If interested in negotiating rent, now is the time to compose a formal email or letter to your landlord with your request. Use this letter as an opportunity to highlight your value as a renter, while including your research findings. Be polite and courteous but firm in your intention. When you’re ready to compose your correspondence, check out our sample letter for negotiating your rent to use for your rent proposal.
- Counter if necessary
If your request to lower your rent comes back with a denial, don’t be afraid to continue the conversation with a counter offer. Consider adjusting the amount you had requested, or suggest a compromise. Perhaps you are in the position to sign a longer lease term if the new rent price is agreed upon. Landlords want to keep units occupied by responsible tenants, and may see the value in keeping you as a renter long term versus the time and hassle of filling a vacant unit.
4. Assess what a reasonable rent reduction would be
If the answer to “Can you negotiate rent” is yes, then the next question is “how much can you negotiate?”. You can always ask for more than what is reasonable. However, you usually have more chance to get what you want when what you demand seems reasonable.
From the above market research and evaluation of the demand for apartments in your area, you should have a pretty good idea, at this stage, of how much over the market you are paying in rent.
For example, if your rent is €1800 but most apartments you sorted out are up for €1650 or €1700, then that means you are paying between €100 and €150 over the market. That is how much you can ask as a rent decrease.
Reasons to negotiate rent
When it comes to the landlord-tenant relationship, it’s easy to assume that the landlord has the final say in all matters. After all, it’s their property, right?
While it’s true that your landlord owns the property and is in charge of crafting the lease agreement, this doesn’t mean you have absolutely no say in the agreement’s stipulations.
In fact, politely voicing your opinion on an important issue such as rent can actually improve your relationship with your landlord. Let’s take a look at a few reasons why negotiating rent with your landlord can lead to more than just monetary gain.
1. Saves money
Let’s get the obvious benefit out of the way: Negotiating your rent to a lower monthly price can save you more than a few bucks. Lowering your rent, even by a slight amount, can lead to big savings in the long run. You can then use these savings to do the following:
- Furnish your apartment
- Pay off loans and debts
- Save money for future moves
- Spend more on entertainment
As stated above, while it’s always beneficial to reduce rent as much as possible, even marginal reductions can lead to more money in your pocket.
For example, let’s suppose you’re able to get your rent lowered by $30 each month. Although this doesn’t seem like a large amount, reducing the rent rate by $30 each month translates into a savings of $360 per year. Hello, additional car payment!
2. Strengthens relationship
As weird as it may seem, negotiating rent with your landlord can actually improve your landlord-tenant relationship.
This is because politely negotiating rent demonstrates to your landlord that you’re not only open to communication, but that you’re also confident—and confidence often leads to respect.
That said, if you approach the conversation aggressively or overly demanding, your relationship may sour quicker than a jar of sauerkraut.
3. Provides learning opportunity
Life’s full of difficult conversations. Why not practice navigating tricky conversations early and often by negotiating rent?
Learning how to negotiate rent can help you later on down the road—especially when it comes to conversations involving finances or legal issues.
What’s more, negotiating rent can help you understand the following:
- The fine details of contracts, especially rental agreements
- How to calmly negotiate with a boss or superior
- How to devise an argument and support your argument with points
Negotiating rent can lead to more than monetary savings. It can give you the confidence and knowledge to stand up for yourself in any situation.
4. Instead of negotiating for a lower rent payment, try asking for other perks, like free parking or free storage space
5. Experiment with the lease terms
Offering a different move-out date, extending your lease term or reworking the end of your lease term to fall during high season (spring or summer) are some of the ways you may be able to play with lease dates and terms that might be attractive to a leasing manager.
How much of a reduction should you ask for?
The amount of decrease you ask for during rent negotiation will make or break your case. Be sure to ask for a realistic reduction based on the going rental rates in your neighborhood (both in your complex and others in the area).
A little research in the nearby rental market is necessary to justify a lower cost. Ask your friends who live in your area what they’re paying and if they’ve successfully been able to negotiate their rent. Don’t be afraid to canvas some neighbors to get an idea of what they’re paying — it’s not impolite. In fact, if they’re paying too much, they’ll be happy to know so they can send a rent reduction letter themselves. Thorough knowledge of rent prices in the area is a key piece of the negotiation and is likely what will ultimately win over your landlord
It can’t hurt to negotiate rent
In the end, asking for a rent reduction can only work to your benefit, as long as it’s done professionally. Your landlord is human and understands where you’re coming from. The worst they can do is say no.