Welcome to Taking Stock, a space where we can take a deep breath and try to figure out what the COVID-19 economy really means for our finances. Every month, personal finance expert Paco de Leon will answer your most difficult, emotionally charged questions about money. This last two years have forced many of us to reprioritize our finances, and there’s no clear road map for getting through the pandemic yet — but Taking Stock is here to help us figure it out together.
This month, we're talking about how to deal with a steep rent hike now that many COVID-related rent discounts have expired. Have you ever faced a large rent increase? How did you deal with it? Did you manage to negotiate it down, or were you forced to move? Tell us your experience here.
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Dear Paco,
I moved last year and got a good COVID discount on rent in a great apartment. It's truly a great place and I felt pretty lucky to score this deal. I knew that rent would probably go up this year and planned for it, but my landlord wants to hike it up by like 30%. This seems really extreme. They are claiming this is the market rate right now. Is there anything I can do? Are there caps to raising the rent per year? Can I negotiate and convince him that this is too high? What would be the best negotiating tactics? What are my options here if I would like to avoid moving again (especially when there's another bad wave going on...) but can't pay a 30% increase?
Dear should I stay or should I go,
Ouch! A 30% increase is quite a jump. The first step is determining if you live in an area with rent stabilization or rent control laws. If you do, your local area's law may limit rent increases. If you don’t, your landlord may be able to increase your rent by any amount.
For example, in New York, some apartments are market-rate units, where the tenants are subject to the forces of supply and demand. But in Los Angeles, where more apartments fall under rent control laws, the maximum amount your rent can go up in a 12-month period is 8%, with the exact percentage tied to the rate of inflation. And currently, as part of emergency COVID measures, rent increases are prohibited for many apartments in the city. You’ll need to do some research on local laws.
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You can start by asking your neighbors and friends if they’re familiar with local housing laws, and also make sure to check out your city, county, and local housing authority websites. These websites will lay out in plain English (as opposed to legal language) the amount landlords are allowed to raise the rent each year and allowable reasons for raising the rent. These sites often provide phone numbers so you can speak to a real person about any questions you have. And of course, if you think you need one, there is no better person to help you navigate the law than a lawyer.
If your proposed rent increase is unlawful, there's likely a legal process to file a complaint. This process is entirely outside of my scope of knowledge, and I’m not an attorney, so I can’t give any legal advice about what would be required for you to go down this path. Consult with an attorney who practices landlord-tenant law or find local organizations, nonprofits, and local tenant's associations to help you navigate this process.
If you’re living in an area where this rent increase is within your landlord’s legal rights, you have the option to accept the increase, decline and move out, or negotiate. Generally, landlords want to retain good tenants, and owners may consider a reasonable offer from a good tenant. Here’s how to come up with yours.
Know the market
Do your research to understand the local rental market. If you have neighbors with the same landlord, like in an apartment building, ask your neighbors if they’ve received similar rent increase notices. Ask friends and look online to find out what similar-sized places are renting for in the neighborhood. You’ll build a much better case against paying more by presenting facts and figures.
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Your track record matters
Landlords generally want to keep their tenants because finding a new one can be costly — especially if repairs, maintenance, and upgrades are required to put the place on the market. A good tenant who has always paid their rent on time may be worth more than just the monthly rent, so if that's you, make sure to emphasize this.
Communicate respectfully and calmly
Since I’m a writer, I’d write my landlord a letter. You may feel better having a conversation with them. Whatever format you choose, approach the situation respectfully and calmly. Also, it doesn’t hurt to mention how much you love the place, the community, the neighbors, and the building staff.
If you can afford it, offer to pay a few months in advance
Offering your landlord a few months' rent upfront might be an attractive offer to them. If the last couple of years have been rough, with other tenants falling behind or unable to pay rent, some extra cash up front could make the difference.
Sign a long term lease agreement
It might make sense to sign a lease for two years to lock in your rate longer and avoid negotiating again in 12 months. If you love your place and want to stay, this option makes sense. Not all landlords are keen on signing a two-year lease, but it doesn’t hurt to ask.
Your finance friend,
Paco (she/her)
This article previously stated that the maximum rent increase for a 12-month period in Los Angeles was 10%. It is currently 8%. Refinery29 regrets the error.
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