Since the Coronavirus pandemic broke in the U.S., many of us have not only been at a health risk but also been exposed to financial peril. Whether you have lost your job, been put on furlough, or seen your own business’ revenues tank, one thing remained the same — You still have to pay your rent. Spending on restaurants, leisure, and entertainment has dropped but that monthly payment which for most is the largest monthly single expense item (In NYC, SF and other big cities it could be 30–50% of your income) has remained the same. In addition, while it has been talked about a great deal in the news, there hasn’t been any official conclusion from the local or federal government regarding any rent relief. Even with a moratorium on evictions (currently August in NYC) and in some cases restrictions for late fees on rent, that doesn’t mean you won’t owe back rent in the future or wouldn’t be evicted once the moratorium expires. If you have suffered financial hardship due to COVID-19, we want to offer you a few proven strategies to negotiate rent with your landlord that may help you get through these difficult times.
1. Ask for a discount on rent
Right now most landlords are just as worried on how to pay their own bills (mortgage, taxes, AOH, etc.), and they are aware that given the massive unemployment and shutdown, the rent payments they were used to getting on time might not be arriving soon. If you are able to pay on time, you can leverage that to ask for a discount on your rent for a few of the upcoming months. We’ve heard back from some of you that you were able to negotiate discounts of 15–30% for two to three months contingent on paying rent on time.
2. Get a free month of rent
Another type of savings some of you have shared is asking your landlord for a free month. This is a better option if you are really strapped for cash right now, but expect some income in the next month or so (or still waiting for the stimulus check, or small business loan). When asking for a free month, you want to make sure you are in current good standing with the landlord and are not late on any previous rents.
3. Ask for an amortized discount
If your landlord is not willing to offer you any straight discount on the rent or a free month, you should try asking for a discount that will be amortized and paid back later. Here’s an example on how this would work. Let’s say your rent is currently $2,000 and you ask to pay $1,500 for the next three months until things get better, then you’d owe the landlord an extra $500 a month, or $1500 total for that period. When things get better, you’ll pay the landlord your regular rent of $2000, plus a portion of what you owe him for the temporary discount ($125 if you amortize the $1500 over 12 months). While overall you’ll still be paying the same amount of rent over time, this will help you conserve your cash during the Coronavirus crisis and also show good faith with the landlord that you are not dodging your rent payments.
4. Leverage your security deposit
Another way to conserve your cash and still pay rent is to leverage your security deposit that your landlord is holding. If you’ve been a good tenant, paid on time and haven’t caused any damage to the apartment or house you are renting, the landlord may be willing to leverage your security deposit towards the rent payment. If you paid two or more months’ rent as a security deposit, then you might be even entitled for a refund of that deposit anyway (in NYC a landlord is now only allowed to ask for one month’s rent as a security deposit). So you should ask the landlord to apply it towards the rent payment. If your landlord is just holding one month’s rent as a security deposit, you could still ask him to use that amount or a portion of it towards your rent. To ease any concerns, you could agree to put up more funds towards the security deposit in a few months, or let him inspect the apartment for any damages now (in person or via facetime).
5. Negotiating when your lease is up for renewal
If your lease is expiring soon, then you are somewhat lucky as you will have more leverage to negotiate based on any of the strategies above. The vacancy rate for rentals is expected to rise as more leases expire and the renewal rate is going to be far less than it is typically for any landlord. A smart landlord should be offering incentives to their current tenants to ensure they extend their lease. You could ask for the first month to be free as part of a lease extension, overall a lower rent, or a more comfortable payment schedule. If you don’t intend to renew, the best option is to ask to use the deposit right now instead of the landlord having to pay it later. Again, you’ll need to ease their mind that there aren’t any major damages to the place which they might be later on the hook for.
We hope that you find these strategies to negotiate your rent during the COVID-19 pandemic helpful and that you’re successful to alleviate some of the financial strain that most of us are feeling right now. Whatever strategy you go for, just make sure you are honest and transparent with your landlord and that you really are experiencing financial hardship. Don’t forget, many landlords have also bills to pay and could be suffering financially themselves.
Were you successful in implementing any of our suggestions? Have a different approach that worked for you? If so, please share in the comments below.