How To Negotiate A Rent Increase (And Save You Money)

How To Negotiate A Rent Increase (And Save You Money)

Are you trying to negotiate a rent increase? 

Is it time to renew your tenancy or lease? Then it is also most likely that your landlord will ask for a rent increase. If that is the case, then  you may want to effectively arm yourself with the best ways to negotiate a rent increase. 

If you are a tenant of a property, then you have probably signed on to a tenancy agreement. Once the duration of that is up, you will need to think about whether to renew that agreement or not. 

It is usually at this point the landlord will take the opportunity to increase the rent payable for the premises. You may not be able to afford this. 

If it can’t, then you have the option of moving to a different place or to negotiate with the landlord. 

However, there are several crucial factors to consider when making such a decision. Here, we guide you through those considerations and how you can negotiate a rent increase.

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SHOULD You Negotiate Rent Increase?

When the landlord hits you with a proposed rent increase when it comes time to renew your tenancy, it is understandable if your initial reaction is one of discomfort, defensiveness, or indignation. 

However, before you lock horns with your landlord over this or send him or her angry-face emojis via text message, calmly consider the following factors. 

1.Do you like your current space?

If you have gotten comfortable where you are now and if you have put in plenty of effort in making your rented house a home, you may be reluctant to move out. 

It could also be the case that you have gotten involved with the community where you are and built a network where you help each other out and look out for one another. 

If you are a parent with kids, then your kids have probably made friends in the neighborhood and have settled into the nearby school. As such, it could be difficult for them to deal with a drastic change at this point. 

If you are a business, you have probably created a strong presence and customer base in your current location and you may be reluctant to lose that goodwill and start from scratch in a different location. 

As you can see, this factor is just the tip of the iceberg when it comes to a rent increase.

It may undoubtedly set you on the path to negotiating rent price with your landlord rather than commencing the arduous (and often expensive) process of looking for a brand new place and making all the necessary moving arrangements. 

2.Is The Rent Increase Justified?

If you are looking to negotiate rent price, you will also want to look at things from the landlord’s point of view to determine if the proposed rent increase is fair. 

Some of the things to consider are:

  • How long have you been paying the previous rent amount? 

If you have been paying $2000 for the past 4 years, then it is only fair for the landlord to increase the rent to a certain extent. 

  • What is the rate of increment?

If it is an increment of between $100 and $300, then it may not be worth it to engage in a rent increase negotiation.

This is especially so if interest rates and cost of living, in general, have increased. 

It is also possible that the landlord is using a substantial part of the rent money to repay his or her mortgage.

However, if the rate of increment is drastically high from your point of view, then you may want to negotiate the rent increase. 

That being said, keep in mind that any rent can only be increased by a reasonable amount and in accordance with the market rate. 

If for example, the landlord expresses his or her intention to suddenly increase your rent by $1000, then depending on your local laws, this might even be illegal and you have every right to oppose such an increase. 

3.What is the landlord like?

If you have had a good relationship with the landlord and he or she attends to any issues with the premises promptly, then a rent increase may be justified. 

Keep in mind, landlords like these are hard to come by!

However, if your landlord frequently ignores you when you ask for repairs to be done or does not carry out his or her obligations in general, then it is only reasonable for you to negotiate rent price increases. 

4.Are you willing to move?

Even if you were to find a place that had a cheaper rent amount, the process of moving is hardly the most straightforward thing to do.

You would have to pack, hire a moving company, arrange for the necessary utilities to be set up. 

If you think that doing all this and incurring these expenses will save you money in the long run, then go for it! 

But if the rent increase is nominal or reasonable, then it may not be worth it. 

How To Negotiate Rent Increases

There are several ways in which you can begin the process of negotiating a rent increase.

Of course, you will have to be respectful and tactful during the negotiations to get the most out of it. 

At this point, you may be wondering how you can negotiate rent renewal with your landlord. 

Here are some tips for the most effective rent renewal negotiations. 

1.Who should you negotiate a rent increase with?

Firstly, you have to determine who to negotiate with. 

Some landlords have agents acting for them so as to not get personally involved with the tenant. Other landlords are more hands-on with their tenants. 

If you are dealing with agents, you should make sure that your intentions regarding the negotiations for rent increase are properly represented to the landlord. 

If you deal directly with the landlord, especially if they are an individual as opposed to a company, then the chances of successful rent increase negotiations are higher.

I tried negotiating a rent increase this year with mty property agent and he wouldn’t budge. But then I managed to get hold of my landlord and he was much more flexible!

2.Get Personal

The ideal way to negotiate a rent increase is to do so directly with the landlord. 

If you have a good relationship with the landlord or even the agent you dealt with when you first took over the place, it would be good if you can speak to them over the phone.

First to ask them the reasons for the increase and to tell them your side of things. 

This makes the process more personal and it will make the landlord more likely to listen to you and your considerations in having to pay an increased rental amount upon the renewal of the tenancy. 

3.Propose a compromise

If you are completely against any rent increase, politely inform the landlord of your reasons and humbly request for any rent increase to put off perhaps for at least another 6 months. 

This will give you some time to prepare for an increased rental amount. 

If you are in a position where you can manage a slight rent increase, ask the landlord if a compromise can be reached.

For example, if the landlord is asking for an increase of $500, you could perhaps request an increase of $200 or $250.

4.Propose a lock-in period

This usually goes down well with landlords, especially if they are not willing to budge on a rent increase upon the renewal of your tenancy. 

If you can afford the proposed rent, then ask the landlord if this new rate can be locked/guaranteed for the next 2 to 3 years at least. 

This is bound to be beneficial to both you and the landlord. 

To you because you have the certainty that you will only be paying this amount for the next few years. To the landlord because he or she is guaranteed a tenant for that time.

This is especially so if you have been on the premises for a while, can show that you have taken good care of the place, and have always paid your rent on time.

It is not easy to find a good tenant so these factors will certainly work in your favor as far as the landlord is concerned. 

5.Always be polite and respectful

As cliche as it sounds, you truly do catch more flies with honey.Most landlords are considerate and understanding of their tenants’ situations. 

If you show them that you can understand their point of view and inform them that you are willing to meet in the middle, more often than not, landlords are willing to negotiate rent increases. 

How To Negotiate Against A Rent Increase

If for any reason, you are unable to agree to even the slightest rent increase by your landlord, then there are some things that you can take into account and inform your landlord to see if he or she is willing to reconsider the rent increase. 

1.Your Income

Sometimes, brutal honesty is more likely to work than beating around the bush.If you are unable to afford it or if times have been hard, explain this to the landlord. 

Ask the landlord if he or she can retain the rental rate for another year or so before proposing any rent increases. 

Most landlords are willing to take this into account and waive the rental increment. 

What you must be prepared for however is for the rate of increment to double the next time your tenancy is due to be renewed.

2.How is the condition of the premises now?

If your place is falling apart and there are constant plumbing or heating issues that you have had to take care of yourself sometimes, then inform the landlord of this. 

This may win you a few points in negotiations against any rent increase. 

3.What is the neighborhood like now?

The other thing you may want to consider when negotiating with your landlord against any rent increase is the state of the neighborhood or surrounding area. 

If it has deteriorated since you first moved in, then you can inform the landlord of this and let him or her know that despite the state, you still wish to remain on the premises provided that there is no rent increase. 

If you are a business and there has been a reduction in human traffic as a result of the state of the area, explain this to the landlord. 

In most cases, landlords are more willing to maintain the existing rent than to receive no rental at all if you decide you would prefer to move. 

4.What kind of tenant have you been?

If you can show the landlord that you have a good payment record and that you have taken care of the premises and even made enhancements to it at your own expense, then your chances of successfully negotiating against any rent increase are higher. 

5.What is the market like?

Is it a landlord’s market or a tenant’s market?

 The latter essentially means that there is a glut of properties out there where landlords are desperate for tenants. 

If this is indeed the case, then you are in a position of higher bargaining power to argue against any rent increase. 

If it is a landlord’s market however and properties for rent are hard to come by, then it may be a little difficult for you to convince your landlord not to increase your rent.

If that happens to be the case, it is entirely possible for the landlord to confirm the expiry of your tenancy and start looking for a new tenant who is willing to pay what he or she is asking for. 

What Is The Next Step?

Once you have made up your mind as to whether to negotiate a rent increase to a lower rate or negotiate against any rent increase, the most important thing you must do is to put it in writing. 

While it is tempting to rely on text messages and phone conversations, in situations like these, it is always best for formal letters to follow to confirm any negotiations or discussions that you may have had. 

This is important to ensure that there are no disputes or misunderstandings between you and the landlord. 

You can write to the landlord or agent by email but do make sure that you attach the formal letter that has been properly signed by you as the tenant. 

When writing a negotiation of rent increase letter, there are some salient points that must be present:

  • Refer to the conversation that you had previously with the landlord or agent (if you have previously reached out to them personally via text or phone); 
  • Humbly request that the rent not be increased OR propose a lower rate of increment;
  • If applicable, propose a lock-in period
  • Clearly explain your reasons for this request;
  • Thank the landlord for his or her understanding and patience.

Here is a quick look at a sample letter to negotiate against any rent increase: 

And here is a negotiate a rent increase sample letter for a reduction in the rate of rent increase

You can also find other sample letters one how to negotiate a rent increase here:

  1. Negotiate Rent Increase 1
  2. Negotiate Rent Increase 2

Don’t Forget About The Deposits!

There is one other thing you must remember if you have agreed to a partial or full rent increase.

You will also need to top up the initial deposit amounts to match the new rental amount. 

As such, you should ensure that you have sufficient funds for this before agreeing to any rent increase. 

For example, if when you first signed your tenancy agreement, your agreed monthly rental was $1500 per month and you had to pay a security deposit that was worth 2 months of the rental amount i.e. $3000. 

If you have now agreed to an increased monthly rental of $1800 upon the renewal of the tenancy, the security deposit will now need to be topped up by $600. 

Don’t Be Afraid To Negotiate

Negotiating a rent increase with your landlord need not be a scary or adversarial process. It is very much a give-and-take relationship, especially in difficult economic times. 

As you can see, if you are looking for ways as to how to negotiate a rent increase, it is not difficult and there are multiple resources that you can turn to. 

As long as it is done respectfully and in an understanding manner, you are bound to get what you are asking for. 

However, if your landlord is being difficult and is refusing to consider any negotiation regarding the rent increase, you may have no choice but to pay the increased rental amount. 

If the rent increase is truly not something that you can afford, then you may need to start looking for a new place to live in or run your business from. 

As much as there are laws in place to protect tenants from unfair and unethical increases in rental amounts, the law also recognizes that the landlord, being the owner of the premises, has the right to charge the rental amount that he or she sees fit. 

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How To Negotiate A Rent Increase (And Save You Money)

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