Considering that now is the most expensive time of year to move, and concessions like owner-paid broker's fees and free months' rent are rare, you may be tempted to stay in your current rental a little longer.
But chances are with your lease renewal will come with some sort of rent increase. Don't freak out yet, though. "The bottom line is rent increases with market-rate tenants are usually negotiable," says Marina Higgins, director of leasing at Argo Real Estate, a company that manages around 8,000 rental units across Manhattan.
Here's what you need to know:
1. First, understand where your landlord's coming from. When it comes to rent-stabilized apartments, landlords are only allowed to raise the rent each year by certain Rent Guidelines Board-approved increments (this year one-year leases will see a rent freeze, two-year leases a two-percent increase). Landlords can raise the rent as much as they like on market-rate apartments, however.
One small building owner we spoke with, who asked to remain anonymous, thinks this year's rent freeze may result in landlords raising rents for market-rate tenants even higher this year. Landlords may take the one or two percent increase they would have given to the rent-stabilized tenants and transfer that to the market rate tenants, instead.
The strength of the rental market, too, isn't working in renters' favors. "In this market, market-rate tenants need to accept that they're going to face some sort of rent increase," says Higgins.
"This year, I'd suggest making an offer to your landlord rather than waiting for him to come to you," says this owner.
2. Your track record matters. If you've been a good (read: quiet, non-controversial) tenant, and always paid your rent on time, you're much more likely to convince your landlord to ease up on a proposed increase. "Generally, the landlord wants to keep you in the apartment. It costs the lot of money to change over an apartment—there can be renovation costs, time that an apartment sits empty and sometimes broker fees. So a good tenant is in a good position to negotiate their lease," says Higgins.
3. Stay calm, and ask politely. The old adage about catching more flies with honey than vinegar is particularly true in lease negotiations. "You don’t want the conversation to be adversarial," says Higgins.
"You want to be polite and respectful," says Gary Malin, president of Citi Habitats. "I think most times, it’s better to say 'I’ve been a tenant for X time, I’ve always paid rent on time. I wasn’t expecting rent increase to be this high. Is there anything more palatable?'"
It also doesn't hurt to mention how much you like the building, the management and the staff.
4. Do your research. See what comparable apartments are going for nearby (check borough-specific market reports and StreetEasy) and figure out whether you'll be paying more than market rate with the proposed increase. If you come armed with numbers, you can make a better case for yourself. But keep in mind that new upgrades to the building and to the neighborhood can increase the cost and asking price. Often, rental values are fluid.
5. Talk to your neighbors. Jennifer C., a Gramercy renter who recently negotiated her rent increase down almost 50 percent, found out that her neighbors with a similarly sized apartment were offered an incentive for booking early. "We were not offered that. So I leveraged it," she says.
6. Small landlords may be more willing to negotiate. "Really large ones use yield management software, but some of the rest are willing to negotiate," a small landlord told us.
7. Price negotiation is usually less successful than asking for upgrades. "Basically, you could say something along the lines of '$100 more per month more would be okay if you put in a new stove," says one landlord. "I generally try to kick back about a third of the above-inflation rent increases to tenant improvements or incentives."
"If you’ve been making complaints about things in your apartment, it never hurts to mention that when it’s time to renew the lease," says Malin.
8. Ask over the phone. "I generally do the bulk of our discussions by phone," says Argo's Higgins. Email is great for memorializing conversations, but the paper trail is not really necessary because it will all be in the lease document," says Argo's Higgins.
Adds Jennifer C: "Have someone who's not intimidated call and talk to management."
9. If the landlord won't budge on an increase, ask for other perks. Other things you can ask for in exchange for the rent increase: Free membership in the building's gym, or other amenities for free or a reduced price. "But I would strongly recommend not combining lease renewal convesation with a list of necessary improvements. It's more likely to become a tense conversation that way," adds Higgins.
10. If they raise the rent, at least ask for a two-year lease. This way you can lock in the price for an extra year and avoid going through this again in 12 months. Just note that not all landlords will go for this, especially in a hot market like the one we're in now. But it can't hurt to try.