- As the worst of the pandemic appears behind us, rents are in the rise again.
- CNBC spoke with experts about how to get ahead of a big jump.
During the pandemic, rents across the country dropped – but they're quickly bouncing back.
That means many tenants, especially those who nabbed a place at a discounted rate in the last year or two, will be in store for an unpleasant surprise come lease renewal time.
"Unfortunately, many renters are receiving higher-than-expected renewals and are being forced to move," said Allia Mohamed, CEO of openigloo, which allows renters in New York City to review landlords.
Still, there are steps you can take to get ahead of a big jump, as well as a number of new protections available to tenants at risk of displacement because of rising housing costs.
Do your research
To begin, renters should learn of any and all rights they're entitled to by their city and state, Mohamed said.
There's a growing movement across the country to regulate rent increases. In Oregon, for example, most hikes are limited to 7%, plus inflation.
Santa Ana, California, passed a bill in October limiting rent increases in most buildings to no more than 3% during any 12-month period, or 80% of the consumer price index change for the year, whichever is less. (If there's no inflation in a year, rents can't go up at all.)
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 across Washington state are guaranteed at least a 60-day heads-up.
You can get a sense of how fair your lease renewal 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, she suggested.
"Does your landlord have vacancies?" Mohamed added. "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."
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 contract.
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 said.
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."