If you are currently a Renter or have rented a property before, you. Know that dreaded feeling when your lease expiration date is quickly approaching. With the expiration of your lease approaching comes the question, and decision, of: should I stay in my existing apartment, or find a new apartment to rent?
It is important to remember there are two sides that are influencing here – you as the Renter, and the Owner or Landlord. This can be a tough decision to make as it is influenced by multiple factors – we discuss how to think about decision so you can enter your next lease with confidence.
Factors Influencing the Owner or Landlord
When thinking about renewing an existing lease with a tenant, an Owner must weigh various costs. The owner is looking at these factors for you to stay:
1. Broker Fee: Depending on the state of the Rental market, it is likely that the Owner will need to offer a concession to secure a new tenant. This is typically paying the Broker’s fee so the new tenant does not have to. This is one’s rent or 15 percent of the annual rent.
2. Standing Empty: What is the risk of the unit sitting vacant for 1 month? 2 months? Even longer? When the empty is unoccupied, the Owner risks losing income.
3. Current Market Conditions: The Owner must have a pulse on the current state of the rental market at the time of your renewal – is it favorable to Owners or Tenants? This impacts the dynamic of their being able to increase the rent, how quickly they may be able to find a new tenant if they do not offer to renew, etc.
4. What is the last price a comparable apartment rented for? Perhaps you entered your lease when the market was lower, and the Owner may be able to rent at a much higher price in the current market. However, Owners prefer a good, known tenant that they dealt with rather than a new unknown tenant. This is where the tenants’ discount lays.
What to Consider as a Tenant
As a tenant, is important to approach the expiration and possible renewal of your lease with an understanding of the following questions.
1. How long do you need to extend for? One year? Six months? Month to month? The shorter the lease, the more it will cost monthly.
2. Current market value for your apartment that you are renting: If you have been paying significantly less than what it could rent for today, it is not unreasonable to expect some increase in the monthly rent on your new lease.
3. Cost of moving: Perhaps one of the biggest considerations that is often overlooked. Is saving $200/MO on rent really worth the cost of moving?
The costs of moving include more than just the fee paid to the Movers. There are both financial and mental costs.
Think about Security deposits, packing, finding movers, moving fees, broker’s commission, time lost from work, possible condo application fees, unpacking. Often times, this costs will largely outweigh the annual cost of an increase in rent.
4. How long do you plan on staying? Does your timeline have moving to a new location in 2-3 years, or perhaps moving in with a partner or buying a property? If so, it may make sense to stay in your existing apartment despite an increase in Rent. Again, the costs and stress of moving may not outweigh an increase in rent.