How to negotiate cheaper rent
Wednesday August 10 2022
So, you’re moving into a new place and the rent’s a bit steep. Or you’ve received the dreaded letter from your landlord that they’re upping the rent. Before you hit the panic button, take a look through this complete guide to negotiating cheaper rent.
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We know, it sounds scary - what if you get rejected? What if they kick you out? What if you have to pay the extra anyway? Honey, in this economy, negotiating cheaper rent is the savvy thing to do. Far from being an embarrassment or a signal that you can’t afford the place, if you do it right, rent negotiation shows that you’re astute and careful with your money, and let’s face it, most landlords like to think they’re in the same boat.
Your negotiation may not work — but it also just might and if it does, you and your bank balance will be thanking you every day of your tenancy.
So let’s take a look at the key steps to negotiating cheaper rent.
1. Consider the “worst case scenario” if you can’t agree on rent
For some, the worst outcome of failing to negotiate cheaper rent will be paying more each week; for others, it might mean finding somewhere else to live. It’s important to be clear on what it will mean for you if you can’t agree on a rate you’re happy with.
One important consideration here is to check your rental agreement and the rental laws in your state or territory, so that you know what it will cost you to leave the place if you have to. If you’d be breaking a lease, that could cost you dearly, and you’ll want to factor that into your calculations.
Similarly, map out the costs of moving if you can’t agree on cheaper rent. Then, decide if leaving really is an option you’ll take if the landlord won’t reduce the rent.
Bottom line: make sure you know what you’re up for if the negotiation doesn’t succeed.
2. Know what your place is worth
The landlord may well want to put the rent up because rents are increasing across the market. Before you write off the rent rise as outrageous, do a little research here on Flatmates or realestate.com.au. Find out what other properties are out there, and at what rental rates. Our Value My Room tool is super helpful in this scenario.
It’s good to compare apples for apples here (as far as you can), so start your research on properties that are as large as yours, with the same kinds of features. But while you’re there you might also like to look around at other options, to see if there’s somewhere more affordable where you’d be just as happy. In light of step 1 above, your moving costs might be offset by cheaper rent somewhere else, and that could make your “worst case scenario” a whole lot more appealing. And a “worst case scenario” you’re actually happy with can give you stronger bargaining power during the negotiation!
By the end of this step, you should have an idea of what comparable rents are out there. If the landlord wants more than the market is asking, you should also now know what figure you want to negotiate the rent down to.
3. Work out the cost of finding new tenants
Okay, now you know what it will cost you if the rent increases, and if you can’t agree on a new rent and decide to move out. But what about the costs of your departure to the landlord?
If you leave, they’ll have to find new tenants. Will that be easy or hard? Research the rental vacancy rates in your area to get an idea. If the rental market isn’t really tight in your area, your room might be vacant for a while as they search for someone new. That will cost them at least the equivalent of your current rent each week. If they engage an agent to find a new tenant (if, for example, your entire household moves out) that will cost them more, too.
Re-tenanting isn’t the only cost, though. Any tenancy sees the property suffer what most leases call “normal wear and tear”. If there are aspects of the place you’ve just been living with — say, a few broken blinds, worn carpet or less-than-spotless walls, the landlord is likely to need to repair or replace those things before they lease the place again. So, add those costs to the figure to get a really clear picture of how much they’d be up for if they can’t agree on a new rent with you.
4. Know what you’re worth
If you’re a good tenant who’s never paid rent late, looks after the place, keeps the neighbours sweet and enjoys living in the property, then friend, you’ve got an edge on plenty of other renters out there. And if you’re happy to negotiate a fixed term lease of two years or so, that will count in your favour even more.
Your good rental history in the property is a solid bargaining chip when it comes to negotiating on rent, since the evidence is right there in front of the landlord and the agent. If you’re trying to negotiate rent at the start of a tenancy, then a strong rental history will also play in your favour, particularly if it includes written references from past landlords.
Knowing what you, personally, are worth to the landlord is important in working out the arguments you’ll use to try to negotiate, so don’t overlook this step.
5. Consider sweetening the deal
If you want a lower rent, one other way to get it might be to save the landlord money. Are there tasks you’ll happily carry out yourself to help keep costs low for them? While a landlord who’s paying a professional to maintain the garden at your property may not let you loose with the hedge trimmer, they might be willing to let you do the mowing, and cut costs there, for example.
One other sweetener is to offer to pay several months’ rent — at a discounted rate — in advance. If you have that kind of cash stashed away, and the landlord agrees to it, an arrangement like this can help reduce your average rent across the year. Sweet!
6. Pick your timing
Most states require landlords to give either 60 or 90 days’ notice of a rent increase. That should let you pick a date to negotiate that leaves you with enough time to find a new place if the negotiation doesn’t work, and you decide to walk.
The last thing you want to do is end up with a week to find a new place, so get that calendar out and work out when you’ll want to meet with the landlord. Keep in mind that they might need some time to consider your counter-offer and the arguments you use to support it, so the negotiation may not be over in a day.
7. Negotiate!
It’s best to conduct the negotiation in person, with your rental agent present as well as the landlord. This way, you can explain your position and present the evidence you have that the property or room isn’t worth what the landlord is asking. When they counter your arguments with their justifications, you can respond in real time. And you can observe the landlord’s and agent’s body language, which will help you understand when they’re open to suggestion, and when they’re not gonna budge.
All this means that the two of you can get everything on the table, and get a good sense of each other’s perspectives, on the spot. With any luck, that will make it much easier to come to a meeting of the minds than if you thrashed it out over email, for example.
8. Ask for more
If you find that, despite the landlord acknowledging that you’re good tenants, they seem unwilling to move on the rental rate, you might consider asking for extra benefits to make it worthwhile for you.
Remember how we said that if you moved, they’d likely have to do some maintenance to the property before they could re-let it? Now’s the time to ask for some of those things to be done. Think about repairs or replacements that might make the place worth what the landlord is asking, and point out that they’ll have to do them anyway if you decide to leave. A good landlord will see the sense in keeping good tenants on with a few sweeteners.
9. Be prepared to look around
If, after everything, you can’t reach a rent (with or without extra benefits) that you and the landlord are both happy with, consider this strategy. Tell them you’ll need to hold off on signing a new lease (or agreeing to the rent hike) until you look around and see what else is on the market. Don’t bluff: actually search for other properties and, if you’re willing to walk away, start inspecting the ones you like.
This might be the twist that pushes your landlord to agree to a reduced rent (once they’ve had time to consider what was said in the negotiation). And if it doesn’t? Well, you’re already well on your way to finding a place with a rent you can afford and accept.
