- As the period of discounted rents in cities comes to an end, many tenants are bracing for steep increases that could force them to leave their homes.
- CNBC spoke to experts about rights renters are entitled to, as well as how they can negotiate with their landlord to get a better rate.
Like many other renters during the pandemic, Trish DaCasta nabbed an apartment that she normally couldn't afford.
The upgrade was a big one: She was able to leave the place she'd been sharing with roommates for more than five years for a studio of her own in a luxury building in downtown San Diego, with a gym and pool.
"It was amazing," DaCasta, 36, said. "I've wanted to live alone since the day I graduated college."
Get New England news, weather forecasts and entertainment stories to your inbox. Sign up for NECN newsletters.
But the good times were tainted by the feeling they were only temporary.
And over the last few months, DaCosta, a Pilates instructor, has been seeing the open apartments in her building go for rents just as high, if not higher, than they were priced pre-Covid. By her calculations, her current rent of around $1,900 could easily go up to $2,300 or more. That would force her to move.
"It's just too much," she said.
As cities begin to resemble their pre-Covid selves again and the period of discounted rents evaporates, many tenants are facing a similarly unpleasant reversal.
"Renters who originally received pandemic pricing are now experiencing steep rent increases at renewal – sometimes upward of 40%," said Allia Mohamed, CEO of openigloo, which allows renters in New York City to review landlords. "I'm amazed this is legal."
While it's true that most tenants in the U.S. aren't protected by rent control policies, some are. Meanwhile, others are helped by requirements they be given a certain amount of notice before their rent is raised. And, in almost all cases, it's worth trying to negotiate with your landlord for a better rate, experts say.
Here's how to prepare for a rent increase.
Research, research, research
To begin, renters should learn of any and all rights they're entitled to by their city and state, Mohamed said.
While many landlords are free to raise your rent at renewal as much as they'd like, some have to provide you with notice. Landlords in Seattle, for example, are required to alert their tenants 180 days prior to any change, and most renters in Washington are guaranteed a 60-day heads-up.
You can get a sense of how fair your adjusted rate is by comparing it to the rents of similar apartments in your area, Mohamed said. Openigloo.com has a rent calculator that can help New Yorkers learn if they'd be overpaying. At Zumper.com, tenants can look up the median rental prices in many cities.
"If you find that other places in your area are going for less, start making a list of examples," said Patty Crawford, vice president of strategic accounts at Zumper. "The more data you have, the better."
In addition to the hard numbers, finding out other information about your landlord and building can also be useful.
What you learn can give you more leverage going into your negotiation.
"Do you have a small landlord that lives in your building?" Mohamed asked. Perhaps you want to emphasize how considerate and quiet you are as a tenant, and that they should want to keep you as a neighbor.
"Does your landlord have vacancies?" she asked. "You could offer to spread the word and make referrals to your friends to help them fill apartments in exchange for a rent concession or discount."
More from Personal Finance:
Nearly 1 in 3 Americans will take on debt this holiday season
How much house can you afford? Here's what you need to know
Here's the budget this millennial used to save $100,000 by age 25
You can also ask your landlord about their preferences.
For example, perhaps they'd consider a lower increase if you sign a two-year lease instead of a one-year lease.
If you're able to, Crawford said, your landlord may respond well to an offer to pay a few months of rent up front. "Many property managers or owners would be thrilled to not have to worry about chasing late rent payments," she noted.
Experts recommend you begin these conversations as soon as possible.
"If your property manager or owner senses your desperation, you won't have a solid stance to negotiate," Crawford said.
If your landlord won't budge on rent, there are other things you could ask for, Mohamed said.
"Maybe some of your appliances are in need of an upgrade, or you'd like a utility bill to be included in your rent," she said.
Some property managers, she added, may also be open to delaying the hike. For instance, they may allow you to pay half of the increase in the first six months and then make up the rest in the next six months.
"If you're expecting a salary bump, this could be a great compromise," she said.
To stay or to go?
As unhappy as you might be with your increased rent, moving may not lead to lower costs, said Jay Parsons, vice president and deputy chief economist at RealPage. In fact, he said, renewal rent increases have grown at only one-third the rate of new leases thus far in 2021.
"Property managers routinely price renewal leases below what they'd charge a new resident," Parsons said, adding that they want to save on so-called turn costs, including changing the carpet, painting and cleaning.
Moving is also not cheap.
"Upfront costs such as movers and utility transfers can add up and might actually be more expensive than the rent increase," Crawford said.
That all being said, you don't want to leave yourself in a situation where you may not be able to pay your rent or meet your other necessary expenses. The general advice is that you shouldn't be directing more than 30% of your salary to rent.
"If a steep increase puts you far above that threshold, I'd suggest finding something else," Mohamed said. "Even if you could tolerate the increase by cutting back in other areas, this may be unsustainable if the rent goes up again the following year."