You get your lease renewal notice in the mail, and it looks like another price increase is coming. Before you rush to find a new place, take some time to think if there is something that would make your landlord want to retain you as a tenant.
Read below to discover why your tenancy can be used to stabilize or eventually lower your rent.
Why do Rent Increases Happen?
Your landlord usually responds to rising costs. Property taxes, insurance, and the cost of maintaining properties generally increase as time goes on. Whether it’s an additional 3% property tax increase from the city or whether a roofer has increased their prices for materials, there has to be some way to pay for that extra expense.
Additionally, the market can play a part. If the rental rates in your neighborhood are increasing, and there is a lack of available rentals, your landlord may increase your rent based on what the market will support. Knowing this will help you to better understand the situation and provide factual information to assist with your negotiation rather than emotion.
How does Tenant Value Fit into Rent Decisions (Cost of Tenant Turnover vs Retention)
When landlords consider raising rent, they also have to make a strategic business decision, whether they can risk losing you for the extra income. You can capitalize on this by understanding your value as a tenant and using it to negotiate a better deal for yourself.
Here’s how:
The High Cost of Turnover
Most renters have no idea what happens after the renter leaves the premises. This unit is vacant most of the time and generates no income. Next comes the maintenance work, such as professional cleaning, painting, carpet cleaning, appliance repairs, and the like.
The landlord also has to pay for advertising the unit and getting new renters interested in it. This includes showing the property and running background checks on all applicants who show interest in renting the unit. In total, getting a new renter for this unit will cost the landlord hundreds to thousands of dollars.
The Value of Retention
Consider also what you bring to the table, as well as how reliable you are. If you make timely payments, prevent calling at midnight about minor complaints. Keep the rental property in a clean condition, and report maintenance needs before it becomes an emergency, as this creates a positive impression of you with the landlord.
To a landlord, reliability is a value. The landlord can rely on you because you are a “known quantity” and therefore safer than some other applicant who may look great on paper, but could develop into a nightmare tenant for the landlord.
When the landlord determines whether or not to increase your rent, he/she is really thinking about this question: Is the small monthly profit from increasing your rent worth taking the risk of renting to another person?
The Numbers Don’t Lie
An additional $50 in monthly rent will result in an additional $600 in annual revenue. However, when you vacate and leave the unit empty for only three weeks, that’s already weeks of lost rent, probably more than the annual increase.
If you factor in the cost of cleaning, repairs, and marketing, there is a possibility that the landlord can lose tens of thousands of dollars by having to replace you as their tenant.
Therefore, this is the reason that most property managers do not take their good tenants lightly. For them, the benefit of retaining a consistent and reliable tenant is often better financially than attempting to find another one.
What This Means for You
You’ve created your own leverage by making your own life easier when you sit down with your landlord to negotiate a lease renewal. Highlight yourself as a good tenant by simply showing your landlord how you’ve made his job easier by saving him money, time, and the hassle of finding a new tenant.
Is it Possible to Leverage Tenant Value to Prevent Rent Increase?
The short answer is yes, but with a caveat. You can’t always stop a rent increase; however, you can avoid a rent increase by demonstrating your value as a reliable tenant who maintains the property. The key is to know how to present your case and when to have that conversation.
Start with the Conversation
Wait for the renewal notice. Call your landlord or property manager three months prior to lease termination. This matters because they will need time to process your request before they calculate potential rent increases.
When you talk, keep it respectful and focused on facts. Say something like, “I have really enjoyed living here and would love to stay long term. Is there any room for negotiation with the renewal terms?” Remember why you are a tenant worth keeping. Mention your timely payment history, your care for the property, and that you report issues promptly instead of letting them get worse.
Offer Something in Return
Negotiations are a back-and-forth process. What can you give them if you want them to stand firm on rent? The most common and most useful trade-off when negotiating with landlords for rent is a longer lease.
Landlords prefer predictability, and by signing a two-year lease as opposed to a one-year lease, you will be providing the landlord with a stable source of rental income. Save them from the cost associated with turning your unit into an available rental unit in the future, and that’s a value proposition they would appreciate.
You may also be able to offer to take care of some minor maintenance issues yourself (within reason). Alternatively, you could also agree to a lower percentage increase over two years as compared to one large increase at one time.
Be creative and look for ways to demonstrate to the landlord how keeping you satisfied will help to reduce their costs.
Let Your Track Record Speak
Your rental history is going to be your best evidence. Have you paid rent on time every month? Have you taken care of the apartment by following HVAC maintenance tips for every season? Do you avoid disturbing the neighbors? Do you call the landlord before there are problems with your unit? The above is just good behavior, but also important data to the landlord’s bottom line.
When you demonstrate your reliability as a tenant through maintaining the property, you will speak to the landlord about your value and keep the rent from increasing. You are not asking for a favor; you are reminding them of the economic benefits of continuing to rent to you.
Know When to Step Back
Even if the rent goes up as much as you were told it would, you may want to continue building a good relationship with your landlord. Your landlord may tell you that market rents have gone up a lot recently, or that some of his/her expenses have increased a lot.
If that is true, ask if he/she would consider spreading out the rent increases over a few months instead of all at once. You could also see if he/she has any “extras”, such as free parking, that would make the rent increase easier on you.
After considering everything, you still cannot afford the rent, give thanks to your landlord for his/her time, and look for another place to live. You will leave on good terms, so you will have a positive reference to help you find your next apartment.
Know Your Options
If you are thinking about moving, do your research before you make a decision. Compare current rent rates in your neighborhood. You may be able to see that although rent has gone up in your building, it is still cheaper than comparable places currently available.
Don’t forget to include all of the other expenses associated with a move when you are making your decision (i.e., deposit on new apartment, truck rental, lost wages). If you choose to remain at your present residence, adjust your budget accordingly.
You can find ways to cut back on other areas of your life and use the money to cover the increased amount you are paying for rent. Lastly, being a good tenant will give you options no matter where you choose to live.
Conclusion
Negotiating a lease extension with a property management company in Baltimore requires a clear understanding of the current Maryland rental market trends. In addition, your worth as a tenant gives you negotiating power.
As long as you continue to pay rent on time, care for the rental unit, and initiate discussions in advance of lease renewal, your landlord will remember that keeping you is generally cheaper than having to replace you.
You may not be able to prevent all increases, but you should be able to make them easier. Treat lease renewal as a business negotiation rather than a request; either way, you will know what you are worth, and wherever you go, you will be able to take that knowledge with you.