With millions out of jobs or working from home, the coronavirus pandemic has pushed many Americans to take a critical look at their spending and at the places they chose to live. With a quarter of the nation's 43 million renter households spending more than half of their income on rent, this monthly expense is naturally getting some scrutiny.
In Manhattan, lease signings dropped by 35% in June, as many New Yorkers opted for the suburbs. But the turmoil of the coronavirus hasn’t only taken a toll on the Big Apple. Compared to previous summers (the busiest time of year for new leases), this is by far the most sluggish time for rentals in recent history. Since the pandemic began, there’s been a cumulative decline in rent price of 0.2%. Typically, rents increase between 1% and 3% from March to August.
After six-months with no commute, you may wonder if proximity to your office is still worth city prices? Maybe you’ve noticed more closed businesses and less foot traffic in your neighborhood? Even if you love the home you’re in, is the money you’re paying for “location, location, location” still a fair deal? Can you still afford it?
If the answer to these questions is no, then it’s time to ask your landlord for a rent reduction. Luckily, in most cities, it’s a renters’ market, so you’re in a strong position.
Negotiating rent can be scary — you’re probably used to rent going up, not down — but it’s possible if you know what you’re doing and can back up your request. Here are five key steps to take when presenting your landlord with a proposal for a reduction in your monthly rent:
1. Know your market
With all the stories of citydwellers packing their bags and fleeing for the comfort of suburbia, it might seem obvious that demand for apartments is going down and your landlord is hurting, but you’ll be in a better position to negotiate if you dig up the data.
“A tenant should be prepared with current data that shows facts like rents in their city or specific neighborhood dropping,” says Crystal Chen, a spokesperson for Zumper, a rental property search platform that puts out a monthly report on rent prices for the 100 most populous metropolitan areas in the U.S. The August report shows continued rent decreases in most major metropolitan areas. There’s also rentdata.org’s database of Fair Market Rents established by the Department of Housing and Urban Development. The latter option is only updated annually, but gives prices right down to the zip code.
Pulling statistics can help you see what’s a reasonable starting point and make a stronger case to your landlord or building manager. For example, if you find rent for new listings in your city is down by 12%, Chen says you should start off requesting a 10% to 15% reduction.
It can also be helpful to simply look at apartment rental sites for apartments in your area with similar dimensions and amenities to see what they’re currently renting for and bring up a few good examples for comparison.
2. Leverage your good standing
Have you paid your rent late a few times? Do you habitually take the party home with you after a night out? Has your apartment ever needed major maintenance repairs after a “small gathering” got too wild? If not, you’re likely a very good tenant in the eyes of your landlord.
“Landlords likely want to keep a good tenant around and not have to worry about trying to find another, especially during a pandemic,” says Chen.
While it might feel uncomfortable to come off as braggadocious, be sure to include this line of reasoning in your request. Something to the effect of: “I appreciate living in this unit. I keep the space clean and well maintained and noise to a minimum. My rent is always paid on-time and in full.” Showcasing why you’re a good tenant can help put things into perspective for your landlord.
3. Ask for concessions
No matter how well prepared and behaved you are, you may find that your landlord just point-blank is not interested in lowering your monthly rent. He’s not (just) a jerk, the mortgage on the building is very likely based on a certain monthly rent per unit— but that doesn’t mean you are out of options.
When trying to fill up a building, landlords will often offer free weeks or months in exchange for a signed lease. During tough times, like right now, they might be more willing to offer these same concessions to hold onto existing tenants and rack up renewals.
A new study from Zillow found that the share of rental listings offering concessions nearly doubled from 16.2% in February to 30.4% in July, as landlords “strive to attract new tenants in a rental market that has softened considerably since the coronavirus pandemic took hold.” While landlords have been shown to offer perks like free parking, waived pet fees, or even gift cards, the most popular concession (accounting for just over 90%) is free weeks or months of rent.
Waiving your first two months’ rent saves about 17% on a year long lease. With two months free, even if you technically write a check for $1,000 each month (your gross or real rent), your net-effective rent will only be about $833.
Some landlords will let you spread the savings over the lease, effectively lowering your rent payment for the year. Typically, though, you just won’t owe rent for a month or two. If you can’t afford the full gross rent, make sure to save the foregone rent to smooth your cash flow. Also, keep in mind that any future rent increases will be based on the higher amount.
Additionally, sweeteners don’t just have to include what the landlord can offer, but what the tenant has to offer too. If you’re in a position to, signing a longer lease (typically two years) in exchange for a lower monthly price can put some chips on the table in your favor. A longer lease is “appealing to landlords even at a reduced rate,” according to Chen, because it guarantees their income for a longer period of time.
4. Communicate clearly
To effectively communicate your wishes, you need to make an effort to be direct and clear. Ask for what you want — and don’t be afraid to be a little bold. If your landlord lives or has a representative on-site, face-to-face (masked) conversation is key. Why? Because it’s a lot harder to say ‘no’ to someone who’s standing right in front of you. In fact, according to a study from the Harvard Business Review, people who broach topics and make requests face-to-face are 34-times more likely to get the ‘okay’ than those who communicate via email.
If your landlord is off-site, then set up a phone or video call. But some landlords are old school, and you’ll need to send your request in writing. Regardless of the circumstances, the clarity of your message is key in getting the response you hope for.
“Tenants should be clear, respectful, and firm, so the landlord takes the request seriously,” says Chen. That means planning ahead of time the reasonable requests you’d like to make for a rent decrease, and keeping cool if the counter-offer is not completely to your liking. It’s also important to begin these talks in a timely manner — typically at least a month before your lease is set to run out.
5. Have a plan for if things don’t go your way
Moving out of your home or having to house-hunt in the middle of the pandemic can be incredibly stressful, but if you can’t pay your current rent anymore, it needs to be an option on the table.
“If moving out for cheaper rent is actually a realistic option for the tenant then they should let the landlord know that,” says Chen.
Do your due diligence to begin hunting for a new place online — if not for having a leg up, then to at least have some peace of mind that you won’t be left to scramble should negotiations not go the way you want.