The lease renewal game: Why the rent hike notice comes three months early
Over on StreetEasy.com, a renter whose lease expires in nine months asks for help predicting the rent increase her landlord is likely to want. Citing many unknowns, including the state of the rental market nine months from now, commenters have issued a broad forecast converging on the 5-10% territory.
In the process, they attempt to plumb the minds of landlords vis-a-vis the dark art of lease renewals.
We found this perspective particularly interesting:
"Here is the MO of a properly-run rental building when it comes to renewals.
- Send you a renewal notice very early, as in 3 months in advance.
- Ask for an above-market rent increase, but not so much as to make you move.
On the first point, the reality of NYC is that you cannot find a great deal unless you look intensely at the last minute. For condos, you should start 6-7 weeks before move-in. For rentals, 3-4 weeks. The purpose of a renewal notice that early is to force you to make a decision without being able to properly assess your other options. So, the name of the game for you will be to delay on committing.
On the second point, there is no way they'll ask for just a 5% increase. That's 2.5% a year, just inflation. While rents do tend to go up with inflation, their job is to ask something higher but not enough to make you move. If market conditions were equal between the time of your lease and renewal time, a well-run place should ask for a 10% increase. If the market became hotter, then a 15% increase would be likely. And if the market totally tanked ala 2009 with a 20% drop, they'd still ask for a 5% increase."
One landlord who posted on BrickUnderground last spring says the squeakiest tenants get the biggest increases.
"So here's how many landlords work," he or she explained. "Upon lease renewal for a market rate apartment I have a business decision to make. What price to offer the next lease? Let's say that the tenant always pays on time. Generally for me this means I don't know the tenants name. A tenant I don't know is a tenant I want to keep."
(StreetEasy.com)
Related posts:
Rent Coach: No dogs for renters; the fine art of rent hikes
Confessions of an on-site leasing agent
BrickUnderground's Renter's Survival Kit
And the biggest rent hikes go to...tenants I know by name
