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Renters across the U.S. are hurting from record-breaking increases in housing costs. In February 2022, median rent in the 50 largest metro areas hit a historic high of $1,792 per month, according to a report from Realtor.com. Nationwide, rents saw 17% growth compared with February 2021, four times that of the pre-pandemic growth rate, according to Realtor.com.
If your rent does increase, you may experience a drastic change in your budget that you weren't prepared for. Here's how to handle a rent increase when you don't have a ton of flexibility in your budget.
Understand Your Rights as a Tenant
Most states and municipalities have laws governing when a landlord must notify a tenant of a rent increase. That means your landlord likely can't hike your rent overnight. The length of the notice period often depends on the type of rental agreement you have, such as whether it's a fixed-term lease or a month-to-month arrangement.
If you're on a fixed-term lease, your landlord can only increase the rent when the lease ends (such as one or two years after signing the agreement), which gives you time to prepare for a potential increase. In a month-to-month arrangement, your landlord may be able to increase the rent anytime, with notice. It's common for states to require landlords to inform tenants of the change 30 days in advance.
Some cities and states have more stringent laws, however, and it's key for you to be aware of your rights. In Seattle, for example, landlords must give 60 days' written notice if the rent increase is 10% or more. If your landlord hasn't complied with the law, you can contest the increase, but you may not be protected from eviction if you don't pay. For details on your state's laws, go to the U.S. Housing and Urban Development website and click on your state, then "Get Rental Help."
Negotiate With Your Landlord
You may be able to limit the impact of a rent increase by talking with your landlord. If you've been a good tenant, it's often in your landlord's best interest for you to stay, since it's pricey and inconvenient for them to have to find someone new. That gives you leverage.
One tactic is to contact your landlord a few months before the lease expires, even before you get the official notice of an increase. Ask if the rent will be going up and start the negotiation early. In today's housing market, it's likely your rent could increase, and if you start the conversation early, you may be able to head off a particularly large jump.
Remind the landlord of your strong record as a tenant and ask for a smaller increase, offering a number that's in line with current rents in your building and neighborhood. You could offer to sign a lease for longer than the standard 12 months at your current rent, which lets the landlord save money by avoiding having to search for new tenants.
If the landlord won't lower the amount they want to charge, try asking for something in exchange for the increased rent. For instance, you might ask your landlord to cover the water bill, pay for an appliance upgrade or waive a pet or parking fee.
Decide Whether to Stay or Move
If your landlord won't budge on a rent increase and you know you'll have some time to prepare, use that time wisely. You can research comparable rentals in your area and decide whether to stay put and make a potential increase work with your budget, or move.
When Staying May Be Best
Calculate potential moving costs, and note the potential time and stress involved with finding a new place to live. Prorated across the whole year, you may decide the cost of moving would actually be higher than the rent increase on your current place. Or moving might not be possible considering your current life circumstances, work schedule and more.
To accommodate higher rent, consider making a budget and reducing nonessential expenses, or negotiating monthly bills like cable, internet and your cellphone contract. Perhaps you can make passive income by renting out your parking space or car when you're not using it; another option is renting your apartment or spare room on Airbnb or Vrbo if your contract allows it.
When Moving May Be Best
If you're not tied to your immediate area and can make adjustments like living with a roommate, moving may be the best option for you. If rents are increasing across your area, you may need to choose a smaller space or a place with roommates. To determine what's affordable, try a budgeting guideline like the 50/30/20 rule. This approach stipulates that your necessary expenses, including groceries, housing and utilities, should add up to no more than 50% of your monthly after-tax income.
Managing a Rent Increase
Tenants with excellent rental history don't need to immediately give in to a rent increase. There are many options for negotiating either for a smaller jump in rent or for other benefits that can help offset the impact of higher housing costs. You may also consider reorganizing your budget to accommodate new rent or moving to a cheaper place.
Remember that you're not powerless in the face of a rent hike: You have rights as a tenant, and there are many ways to adjust your budget for a major change in your expenses.