Thanks to the COVID-19 pandemic, tenants in many parts of the country are witnessing something they haven’t seen in years: falling rent prices.
The recession brought about by the virus and governments’ response to it presents an opportunity to negotiate a better place or a better price, if tenants play their cards right, experts say.
Average rent for all property types across the country was $1,723 in December, down 7.1 per cent from a year ago, based on listings on Rentals.ca, which releases a monthly rental report. The report said that average rent for a 55 square meter (592 square feet) one-bedroom apartment fell 6.4 per cent in the final three months of the year, while average rent for a 74 square meter (796 square feet) two-bedroom apartment fell 3.4 per cent.
Geordie Dent, director for the Federation of Metro Tenants’ Associations, notes that rent prices aren’t falling in every city – things are changing quickly with the COVID-19 pandemic, so tenants should research rent prices in their specific area. For instance, standalone home rentals are much hotter than condo rentals in Toronto, and thus less likely to have room for negotiation, says Nasma Ali, founder of One Group Toronto Real Estate.
But overall, the COVID-19 pandemic has “changed the game tremendously,” shifting power from landlords to tenants, says Dent. This changing power dynamic is what makes it a good opportunity for negotiation, says Suze Cumming, Canadian Director of the Real Estate Negotiation Institute.
Ali says several of her clients have had tenants try to renegotiate their leases recently, and while it’s not a great feeling for landlords, she encourages them to see the good in the situation.
“If the tenant is already thinking about moving out and getting cheaper rent, I would highly encourage them to speak with their landlord openly,” says Ali. “I’m sure the landlord would prefer to have a chance at negotiating versus losing a tenant, especially a great tenant.”
When going into a new lease, different landlords may have different priorities: filling a space quickly, or having an easy tenant. Cumming says that can become leverage for the prospective tenant to offer a quick move-in date or to do their own snow removal – in exchange for lower rent.
Ali says that if you’re looking to move, working with a leasing agent can help reveal which units are ripe for negotiation. Agents know what price similar units are renting for, whether a building has a lot of vacancies, and whether a listing has been on the market for a long time.
“If we know the agent on the other side, it’s a way easier negotiation,” says Ali. “The other thing is that you’re going to be better represented – a lot of people are too embarrassed to negotiate for themselves.”
If you plan to ask for a lower rent rate, Ali says its important to be ready. If asked, present a full credit report, not just the pages with the scores, she says. Have your references on hand, and consider including a letter describing why you will be a good tenant, or explaining the story behind any decline in income or credit. Ali says offering to pay a few months rent up front can also sway a landlord to accept a lower rate.
Dent says that for new leases, it’s always helpful to see what other rental buildings are offering, and ask if the landlord for your desired place will match the terms. For example, including utilities in the rent price, offering one to two free months of rent, or having a longer or shorter lease length could all be on the table, he says.
“How people have been approaching the rental market, specifically in the last 10 years, is if you find something and they’re willing to rent, you grab it,” says Dent. Now, he says vacancy rates in some cities are higher, which means tenants have more options.
“Take your time. ... try to get a sense for what other people are offering.”
Not every landlord will be open to negotiating – some don’t mind leaving their unit vacant while they wait for the right tenant or right rent price, says Ali. It’s also easier to negotiate with your existing landlord if you’re month-to-month and not under a 12-month lease. Dent suggests that individual condo owners will be more open to negotiation than big management companies.
Cumming says negotiations tend to work out better when you know where the other side is coming from. Particularly if a landlord seems resistant to negotiations, it can pay to come in with a soft approach, says Cumming, since bullying rarely works in negotiations.
“Tenants have power for the first time in decades, and that’s a great thing. I’m all for it,” says Cumming. “But don’t take the power for granted.”
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This content appears as provided to The Globe by the originating wire service. It has not been edited by Globe staff.