The lease renewal game: Why the rent hike notice comes three months early
By Teri Karush Rogers |September 2, 2011 - 12:22PM
Over on StreetEasy.com, a renter whose lease expires in nine months asks for help predicting the rent increase her landlord is likely to want. Citing many unknowns, including the state of the rental market nine months from now, commenters have issued a broad forecast converging on the 5-10% territory.
In the process, they attempt to plumb the minds of landlords vis-a-vis the dark art of lease renewals.
We found this perspective particularly interesting:
"Here is the MO of a properly-run rental building when it comes to renewals.
Send you a renewal notice very early, as in 3 months in advance.
Ask for an above-market rent increase, but not so much as to make you move.
On the first point, the reality of NYC is that you cannot find a great deal unless you look intensely at the last minute. For condos, you should start 6-7 weeks before move-in. For rentals, 3-4 weeks. The purpose of a renewal notice that early is to force you to make a decision without being able to properly assess your other options. So, the name of the game for you will be to delay on committing.
On the second point, there is no way they'll ask for just a 5% increase. That's 2.5% a year, just inflation. While rents do tend to go up with inflation, their job is to ask something higher but not enough to make you move. If market conditions were equal between the time of your lease and renewal time, a well-run place should ask for a 10% increase. If the market became hotter, then a 15% increase would be likely. And if the market totally tanked ala 2009 with a 20% drop, they'd still ask for a 5% increase."
"So here's how many landlords work," he or she explained. "Upon lease renewal for a market rate apartment I have a business decision to make. What price to offer the next lease? Let's say that the tenant always pays on time. Generally for me this means I don't know the tenants name. A tenant I don't know is a tenant I want to keep."
Brick Underground articles occasionally include the expertise of, or information about, advertising partners when relevant to the story. We will never promote an advertiser's product without making the relationship clear to our readers.