Summer in the city means rents are at their peaks, and by our recent estimates, setting yourself up in a new place could put a $12,000 hole in your wallet (and that's only for a one-bedroom). If your lease is about to run out, it may make financial sense to renew it, rather than move.
Typically, landlords let their tenants know about renewing--as well as any potential rent increases--about 30 to 60 days before the agreement expires, says Anit Kliot of property management company Kaled Management. For market-rate apartments (i.e. those that aren't rent-stabilized), the sky's the limit on how much a landlord can spike the rent, unless your lease specifically prohibits this.
If you're planning to sign up for another year, be smart about how you do it.
1. Negotiate your rent increase
Just because your landlord says they're going to raise your rent by some spectacularly high number doesn't mean it's a done deal.
Knowledge is power: Arrive at any negotiation with info on how much it costs to rent an apartment like yours. If you find that comparable places are renting for 3 percent more than what you're paying, you'll have a much stronger argument against your landlord's plan to raise the rent by 10 percent.
Look at StreetEasy, Craigslist, NakedApartments or other rental listings websites to get an idea of the going rate. Focus on places in the same neighborhood with the same bedroom count and similar features, like an elevator, doorman or other amenities. Keep descriptions and photos of these apartments on hand.
Stay put for more than a year more: You can also offer to sign a lease for longer than 12 months; two years is common. This is a win-win: you don't have to deal with another rent hike a year from now, and your landlord is guaranteed a good tenant for another year.
Also, landlords love it when leases come up for renewal during the busy May to September rental season when rents are highest, so if yours is renewing on a different month, you could offer to restructure the timing. Just beware that you'll have less leverage the next time--or face stiff competition when you look for another apartment.
Negotiate an option to renew: Consider renewing with an escalation clause, which gives you the right to renew at terms you agree to now, typically at a 3 to 5 percent increase.
2. If your rent is going up, prepare to put down a higher security deposit
If you're renewing your lease, and there's an increase in rent, chances are you'll have to put down a bit more of a security deposit. How much it is will depend on your situation, but it could be as little as $25, as much as $200 or the difference between your old rent and your new rent.
3. Renew your guarantor arrangement if necessary
If you used a guarantor--someone who agrees to cover the rent if you stop paying it--when you signed your lease, you won't necessarily have to use one again when you renew.
In some smaller buildings, landlords may waive the need for one if you've shown you can pay your rent on time. Others will require a guarantor to sign again, or, sometimes, the guarantor agreement from the original lease will carry through to the renewal.
At buildings managed by Kaled, for example, some leases say that the guarantor is good for the entire time the tenant stays in the apartment, so they can save the hassle of refiling paperwork every year. Though that can be convenient, it also means they're on the hook for longer. "However," says Kliot, "we prefer to have the guarantor renew their paperwork annually."
Typically, traditional guarantors (parents, usually) can be on the lease for renewals but still have to redo the paperwork every year just to check that it's all still okay, says Jeffrey Geller of Insurent Lease Guaranty, which guarantees leases for a fee.
For lease renewals, Insurent offers a 15 percent discount on its normal rates of 80 percent of a month's rent if you have U.S. credit and 110 percent of a month's rent for foreign residents with no U.S. credit, Geller says.
4. Explore the month-to-month option
Some landlords, especially small ones, will allow their tenants to forgo signing a lease and instead draw up a month-to-month extension.
For the renter, this kind of agreement provides flexibility--you're not committing to staying for an entire year longer. But it also means you have less control over the situation: you're essentially just staying for successive 30-day periods, and your landlord could raise the rent or otherwise change the agreement with little notice, and you'd have to play along or move.
"For month-to-month extensions, I feel it really boils down to the relationship you have with the tenant," says Trevor Matwey, a spokesperson for LandlordsNY, a social network for landlords. "Have they been a problem tenant? Or, are they a good tenant that always pays and doesn't cause problems with the building or other tenant?"
And for rent-stabilized tenants...
If you live in a rent-stabilized apartment, the renewal process is a different animal entirely. First of all, your renewal is automatic--your landlord is legally obligated to let you stay--and you'll get 90 to 120 days' notice of any rent increases, Kliot says.
The amount your rent can be hiked is set every year by the New York City Rent Guidelines Board. Currently, landlords are allowed to raise the rent by up to 4 percent on a one-year lease and 7.75 percent on a two-year lease.
While in theory a landlord could raise the rent less than 4 percent, or you could try to negotiate it below the maximum, in practice this almost never happens. After all, landlords have all the power in this situation: they're usually only too happy to have a rent-stabilized tenant move out (typically a tenant's main source of leverage), and free up the apartment for an even bigger rent increase.