Has your rent increased recently? If so, you are definitely not alone. With high inflation occurring globally, commodity prices are not the only ones affected. Experts predict that many major cities will be experiencing a significant rent hike in the coming months. If you’re living in or planning to move to a major city you might be surprised as to how much.
The average rent increase per year for one-bedroom apartments in NYC for example, went up by around 41% between 2021 and 2022. But it’s not just isolated to big cities like New York or San Francisco. Even Houston, known for its housing affordability, had the highest rent increase of 108% in the same period. Two-bedroom apartments may have relatively lower rent increases ranging from 37% to 57% but the total rent price might still be high for many.
We recently conducted a survey across Diggz members to find out if they received a notice of a rent increase, and how they addressed or planned to address it. 33% of the respondents indicated that they decided to move to a new place to offset the rent increase. 24% percent took action by negotiating the rent, while another 24% responded that they will add a roommate or additional roommates. And finally, 20% indicated that they will look to cut back on other things.
Since rent can take up to 50% of your income, a rent hike might take a toll if you’re not prepared for the additional expense. You might go beyond your monthly budget or worse, start dipping into your savings ultimately priced out of your own home. But not to worry, we have a few suggestions to help you offset any increase in rent. All of actions below can have merit on their own or combined. We’ll break them down with our own tips for each and what to watch out for.
Move to a New Place
Move Out (or not)
If you are considering moving out, test the market first to ensure you are not going to go through all the trouble and costs of moving just to end up with a slightly lower or even the same rent price. Take into account your time looking for a place, packing, moving and unpacking and weigh if it’s worthwhile compared to the savings on rent. If you like your current place, it’s always worth trying to negotiate first. If all else fails, find another place that fits your budget, even if it means downsizing or moving to another area that is more affordable.
Moving out allows you to pick a place that fits your needs and that is within your budget. However, keep in mind that the rent price you get today might not stay as low once it’s time to renew. Consider locking in your rent for more than one year, or research if the rental prices in the new place have been increasing heavily over the past few months or years, or if it’s rent stabilized by law. You definitely don’t want to go through the hassle of moving just to face another sizable rent increase next year. Watch out for any preferential rents, and net effective rents applied to the first year of your lease. While they are great for year one, those can be taken away upon lease renewal. Then you are stuck with a big rent increase. Again.
Look for Better Deals
You might love your apartment or house and feel like you could live there for many more years, but if a rent hike will force you to cut too many corners, don’t hesitate to look for better deals around you. There are many apartment search platforms that you can use to explore new rentals that would fit your budget and needs. So you don’t really need to step away from your computer or phone to conclude whether there are better deals out there or not. If you find that your new rent will be much higher than what’s available nearby on the market, it might be wise to start looking around for a new place near you.
Consider a New Neighborhood
Just when you thought that you already found your nesting place, a new opportunity for discovery comes along, maybe in disguise of a rent hike. If you’re living in an area where the average rents went up to an intolerable level, exploring affordable neighborhoods or areas that are a bit farther away might be a good idea. You can look for areas not only with lower rents but lower records of rent hikes. Even though moving away from downtown or your beloved neighborhood sounds like a downgrade, you might be surprised how new surroundings can be an exciting experience. You’ll discover new favorite spots to eat and drink, parks to explore and meet new neighbors. A big change but without having to start all over again in a completely different city.
Downsizing is not always Downgrading
You may be comfortable in your current home, but if your budget does not agree with the rent price, downsizing might be unavoidable. You can find a cozier place at a lower cost, maybe even with the same amenities. Sometimes you can even move into a smaller apartment within the same building or complex. If you have a home office today, you might do fine with a small corner desk or working off the dining room table. If you live alone in a one-bedroom apartment, you might be just as comfy living in a studio apartment instead.
Alternatively, you can look for a new place that has less amenities as before but still at a more reasonable price. For example, you might currently have a gym in your complex or building, but a building without a gym might be hundreds of dollars less in rent. You can use these savings to pay for an external gym, and still pocket savings on rent. As another example, if your place has a washer and dryer, that is super convenient and in many cities a sign that “you have made it”. But can you live without it? an in-unit washer-dryer can command a few hundreds more to your rent price, so getting an apartment without it might be priced for less. You can find local “wash and fold” services to do your laundry, or do it yourself at a laundromat. Still with the added cost of laundry services, you’ll still save money on rent (and probably also on your electric bill). Similar to finding better deals, you can easily find apartments online to see what’s out there first for your budget.
Negotiate Your Rent
If your rent is set to increase, right off the bat, you’ll be thinking of ways how you can negotiate your rent. But if you are not equipped with ways to sway your landlord to lower your rent, negotiating can be daunting.
Establish your worth as a Tenant
The first thing you need to do when negotiating with your landlord is to establish your worth. Remind your landlord how good a tenant you’ve been. You don’t damage the property and most importantly, you always pay rent on time. Also, do some research on nearby comparable apartments and if they have lower rents, you can use it as a bargaining chip during the negotiation. Also, if you have extra cash to spare, you can pay some of your rent in advance to show how willing you are to invest in this long-term deal.
Sign a Longer Lease
Another tip you should consider whether negotiating with your current landlord or a new one is signing a longer lease. When you know that your renewal is already approaching, talk to your landlord about how you can lower the rent increase. Ask for a longer lease. You can negotiate how waiting for a new tenant can be unprofitable when you’re right here willing to sign a longer lease just for a slightly lower rent in the future.
Take Advantage of Seasonality
If your lease is set to end during less in demand rental periods, for example in the winter, you can offer your landlord to sign a 14 or 16 months lease instead of the standard 12. This way if you end up moving out at the end of your lease, the landlord won’t be scrambling to find another tenant and offer concessions in those less in demand months. In return, you should ask for a concession on your rent price. Some landlords will even offer you a free month for that, whether as a lump sum or amortized throughout the lease.
However, when thinking about signing a longer lease, remember that some landlords agree to it if they expect a future decline in the market prices. Once you sign this deal, you will be contractually bound with the existing rent even if market prices go lower. Also, if your income level changes, you might not be able to afford the apartment anymore. But this is a problem solved by doing your research and a little bit of planning ahead.
Make sure to also check out more tips to negotiate rent with your landlord.
Find (more) Roommates
One of the obvious actions you can take to lower the impact of a rent increase is to find a roommate. If you are already living with a roommate, you might consider finding a third or fourth. this could be for your existing place or even for a new and bigger place. Typically larger apartments shared by more people will be cheaper on a per person basis than a place meant for two to share. If you have room to spare, a large living room that you can convert into a bedroom, or even a basement, make the most of it. Not only can you split your rent in half or a third, but you’ll also have someone to pay a portion of the utilities and other household expenses.
Some hesitations when finding a suitable roommate are all about compatibility. What if this roommate of yours wants the thermostat down when you’re always chilly? What if they are allergic to dogs while you’re a fur parent? But don’t worry because our very own roommate finder, Diggz, can help you find the best roommate based on your preferences no matter how specific they may be. Just set your criteria and the platform will present you with the best roommate matches for you.
Offer Short-Term Rental
If having a permanent roommate is not your thing, you can try to rent your spare space for a short-term. Whether it’s a few days, a week or even a few months out of the year. This setup does not even have to be done regularly. You can rent out your spare room for a weekend a month or maybe just when you are out of town yourself. Depending on where you live you can collect $100 or more per night. This can definitely be a way to offset any rent hike and maybe meet some interesting people in the process.
By having your extra space rented out, you can generate some passive income without working more hours. However, remember that some cities may have rules on short-term renting, but if the place is your main residence and you’re just renting an extra room, this tip can help you get money for rent, fast. You can find short-term roommates for a few days on sites like Airbnb and the likes, Facebook groups, and of course on our very own Diggz if it’s for a month or longer. Just post a room for rent listing, and set the lease term accordingly.
Reduce your expenses
Once you sign a lease agreement, getting your rent lowered is close to impossible. If you’re already in a tight spot making your current rent, tracking and reviewing your expenses can be a smart way to go.
First off, you can eat out or order in less often. Eating out is obviosly the most expensive option, even at affordable places or fast casual dining places. It adds up quicks. And delivery apps? with service fees and tips, a $10 sandwich can easily turn into a $25 meal. So why not put your kitchen to good use? You can explore new recipes and reduce your food expenses (not to mention eat fresher and healthier food). Even making your daily cup of coffee at home can add up in savings.
Also, don’t underestimate the benefits of rethinking your current streaming subscriptions or cable service. Try limiting to one service a month, binging on the shows you like, then switching to another provider. This way you’re not paying for 3–5 different services all at once each month. If you are paying for regular cable, you can subscribe to streaming services like Hulu, Sling or YoutubeTV to get your live TV channels. You save close to $100 by making this switch. By making small changes, you might even end up saving hundreds of dollars. How great is that?
Periods of rent hikes are always daunting, especially if you’re not prepared for them. But nothing beats someone who is informed and prepared to take action. You don’t have to wait for the last minute either. Do initial research and try following our tips to keep you ahead of the game. It will keep you away from unwanted surprises later on.
If you have other ideas or examples of how you dealt with a rent increase, share them with us and others in the comments.