Rodolfo Delgado is the Co-Founder & CEO of Replay Listings, a mobile-based platform to find rental apartments in NYC through unedited videos
The average price of rental apartments may be expected to go down in the future, but the market correction may not happen as quickly as many believe. Landlords understand that lowering their properties’ rental prices may negatively impact their portfolio, which is why many landlords are now offering more concessions to weather the pandemic.
There are many reasons for wanting to negotiate the rent. Whether it is the evolution of someone’s financial circumstance, the fact that there are competing properties in the neighborhood with lower prices or because the building is sitting with too many empty units, here are a couple of things renters should keep in mind when negotiating the monthly rent.
Focus On Concessions
When negotiating, focus on getting free time rather than paying less money.
In Manhattan, owner payments (commonly referred within the industry as OPs) have risen 12.5% year over year. For people looking to rent an apartment, this means that landlords have yet one more card to play before lowering their prices and devaluing their portfolios: offering concessions. Taking care of the broker’s fee or offering one month of free rent on a 13-month lease are the most common concessions. From a landlord’s perspective, this is an effective way to weather temporary turbulence on the market.
Nevertheless, many believe the global economic turbulence and health factors are here to stay for longer than one year, which is why many tenants expect a decrease in their rental price.
In most of the United States, landlords compensate real estate agents for their work — with New York being an exception. In New York, people looking to rent an apartment usually compensate their real estate agent/broker by paying the equivalent to 15% of their annual rent as a broker’s fee, although this is subject to change.
Offering to sign a longer lease commitment — two or three-year leases are relatively common — may be used as potential leverage during the negotiation process. Offering to pay a few months in advance is another option for those with the financial capacity to do it, assuming their landlord allows payments in advance.
Ask For A Landlord’s Reference Letter Before Negotiating
A tenant asking for a landlord’s reference letter often indicates that they’re preparing to move. If you’ve been a good tenant, kindly ask your landlord’s representative for a reference letter at least a week before your negotiations. You don’t have to explain why you’re asking for it. Doing so can send a message that you’re informed about the current state of the market and have likely explored other options.
Research Your Neighborhood
A slight rent reduction or concession may be reasonable and realistic if it is in line with rent paid on similar apartments in your neighborhood. Do some research on rents in your area, and present your findings to your landlord’s representative when making a request.
Use Emails To Set A Precedent
Emails may be legally binding, and it may prove useful in your future to have a concrete precedent of the communications between you and your landlord. Chose your words carefully when crafting your email, and explain your circumstance in a simple, easy-to-digest manner.
Temporary Rent Reductions
Nobody is immune to financial hardship. The current global financial circumstance has many tenants asking for a temporary rent reduction, which usually only lasts a couple of months, to allow them to get back on their feet. If you’re going through financial hardships, you may find some templates to use when asking your landlord for financial relief here.
My colleague, veteran New York City real estate agent Alexander Zakharin, recently reminded me that there’s always an option to break your lease. For many, moving back to living with their parents makes perfect sense as a temporary alternative. Finding a knowledgeable broker to find new tenants to take over your lease is an option many landlords accept, especially during economic turbulence.
Know Your Position
While it may be essential for you to maintain your current residence, your lease renewal greatly benefits your landlord too. It avoids the expense of listing the vacant property and preparing (and cleaning) the new tenant’s space. It also prevents the application process and the likelihood of a loss of income during their search for applicants.
Always be kind during your negotiation process. Remember that the person you are communicating with may not be the landlord, but a landlord’s representative. As representatives, they may not have much leeway and are merely following protocols. Being kind to them and explaining your circumstance will yield the best results by allowing them to understand the driving factor behind your negotiations.
If you have a good track record of paying rent on time and you have been a good tenant overall, chances are your landlord will want to keep you as a tenant. Do your due diligence and present a good case when you contact your landlord so they are more likely to lower your rent.
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