Once a lease term expires, renters are faced with two options: move out or negotiate the lease renewal. For landlords, renewing the lease is typically a good time to increase the rent to a rate that’s more in line with current market trends.
This isn’t great news for renters, but that’s not to say they have to simply accept the new rate. Indeed, with a few tricks up their sleeves, renters can negotiate a deal that works for them.
To that end, this guide offers 7 negotiation tactics that renters can use to improve the terms of their lease renewal.
1. Carry Out Local Research
Knowledge is power in any type of negotiation, so it’s essential for renters to arm themselves with hard facts about the local rental market. Researching comparable rental units is a great start. It’s good to find out how much similar houses are renting for. If the proposed rent increase is higher than the norm, renters will have a solid argument for reducing the price to something more in line with local rates.
If possible, it’s also very useful to find out how much direct neighbors are paying for the same type of unit. Should the rents be lower than the proposed increase, renters can argue that they’d be better off moving into a similar place nearby, meaning the landlord will be required to spend more money seeking out new tenants.
It’s worth bearing in mind that in a hot market, landlords will be in a stronger position than the renter. However, by carrying out local research, renters will at least know that the rent increase is somewhat justified.
2. Highlight Renter Strengths
Renters who have a positive history of keeping up with payments and keeping their homes clean and maintenance-free should use this to their advantage. All landlords prefer to rent to tenants who are reliable and responsible, and bringing a new tenant in is always something of a gamble. As such, for the most part, it’s in the landlord’s best interests to stick with tenants that they know.
Renters can use their strengths to their advantage when negotiating lease renewal terms, especially if the increase makes the rental unaffordable. By writing a letter to the landlord that explains their flawless history, as well as how much they enjoy living in the house, renters may be able to convince the landlord to keep the rent affordable.
3. Be Polite and Professional
It’s important for renters not to take a rent increase personally. Normally, landlords use software to arrive at the optimum rental price based on local market trends. While a handy guideline, it misses some of the nuances that renters can use to their advantage.
However, renters are advised to approach lease renewal negotiations politely and professionally. Getting angry and emotional rarely helps to get points across effectively. But by remaining respectful and business-like, renters will find that most landlords are willing to talk.
4. Push for Extra Perks
While reducing the rent may be the primary goal, sometimes it’s just not feasible, especially in a hot market. However, renters can still negotiate other terms. For example, if there are several repairs that have yet to be taken care of, these should be addressed. Upgrades are another perk that renters might be able to negotiate.
For example, a renter with a positive history may be able to convince their landlord that they’d be happy to pay more in rent in exchange for a bathroom or kitchen renovation, double-glazed windows, or a new heating system.
5. Lock In a Longer Lease
For renters who know they don’t want to move elsewhere any time soon, it might be worth proposing a longer lease. By offering to extend the lease by two years rather than one, for example, renters offer the landlord an increased sense of stability. As such, they might be more willing to drop the rent. As a bonus, the renter will be protected from market fluctuations for the next two years.
There’s no guarantee that the landlord will agree to a longer lease, but for some, it will be a sign of the renter’s commitment to the rental, and it never hurts to ask.
6. Know the Local Rental Laws
Rent laws differ throughout the country, but in many areas, local regulations are designed to protect renters from unfair rent hikes. It’s well worth researching local rental laws and rent increase caps to ensure that what the landlord is offering is actually legal. If it’s not, renters will be in a very strong position to negotiate better terms when renewing their lease.
Besides rent increase caps, it’s also a good idea to look into the required notice periods and any codes and standards that landlords must abide by. If the landlord or property isn’t meeting the required criteria, this can also be used during negotiations.
7. Be Prepared To Move On
The strongest negotiators are those who don’t appear to have anything to lose. By being prepared to move out should the renewal terms not be satisfactory, renters hold a lot of the cards.
It’s not about bluffing, but rather leverage. If the renter can afford to move on, the landlord suddenly finds themselves having to seek new tenants, potentially renovate the house, and lose at least a month’s rent. This in itself may be enough to make them reconsider and offer better renewal terms.
Some additional negotiation rules to follow include:
- Don’t talk first,
- Avoid asking the landlord for better terms,
- Communicate as little as possible, though remain polite and professional,
- Be ready to say no and walk away.
Instead of making a counteroffer, renters can inform their landlord that the proposal is too far off their expectations, so no negotiation is possible at this time. They may suggest that the landlord could revise the renewal offer instead.
Of course, this approach isn’t for everyone and should only be used by those who are seriously prepared to move out.
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