HOW TO NEGOTIATE YOUR RENTAL ESCALATION
Rental increases are, unfortunately, inevitable – but does this mean that you as a tenant have no choice but to accept whatever percentage the landlord decides? Luckily for you, you may be able to negotiate yourself into a more manageable rental escalation.
Should your lease be renewed?
Every year on the anniversary of your lease, the rental agent and landlord need to decide two things – firstly whether to renew and secondly what escalation will apply. It’s unlikely that your lease will be renewed if you’ve:
- Been tardy with rental payments
- Made an unnecessary number of unreasonable demands
- Been regularly uncooperative with access for contractors or inspections
- Had complaints regarding your conduct in a Sectional Title Scheme or from neighbours
- Been dishonest or disrespectful in reasonably maintaining the property
How are rental increases established?
For landlords, escalations should reflect a fair return on their investment and should be market-related. An industry-standard seems to be 10% per annum, but the landlord may at his/her discretion decide to waive the increase or increase the percentage to ensure its market-related. You also need to keep in mind that the increase in rentals is influenced mostly by supply and demand and that there’s no real science or guideline when establishing the percentage of how much your rent will increase. There are, however, a few misconceptions such as:
- The maximum is 10%
- It needs to be in line with inflation
- An increase in rent obliges the landlord to make upgrades
Below are things to consider when trying to negotiate your rental escalations with your landlord:
- Paying your rent on time and in full (this may mean consistently paying one day before the rent is due) will ensure that all utilities are paid promptly, which may give you leverage to negotiate a lower rental increase.
- Good communication is key and keeping the agent/landlord informed of any necessary maintenance issues and being flexible with access for repairs, will make you stand out as a reasonable tenant.
- Be reasonable and understanding that the agent or landlord cannot be obliged to attend to any and every small maintenance item. Sometimes fixing it yourself will aid your cause when negotiating a lower increase.
- Keeping the property neat, clean, and presentable goes towards establishing you as a good tenant that the landlord will want to keep on. This can help with your negotiations.
- Keep a record of items you have attended to or improved within the property. Remind the agent or landlord of these without trying to coerce a lower increase.
Just remember, you can confidently request a lesser increase if you have been an overall great tenant. If you’re still feeling nervous about negotiating your rental increase, reach out to a real estate professional who’ll be able to offer your advice and guidance on how to approach your landlord. However, if you’ve already decided you’re not renewing your lease, seize the day and start the search for your next home.
*Advice sourced from Grant Rea, Rental Specialist at RE/MAX Living.