How To Negotiate Your Rent (And Why You Should)

Each time the first of the month creeps up, do you feel a shiver go down your back? Do your jaws clench? Is there a vibration that begins to radiate between your temples? If so, I take it that rent is due. And as the COVID-19 pandemic ruthlessly persists around the world, that feeling has probably never been as anxiety-inducing.

It's a time when unemployment rates are high, when many industries have cut hours and wages, and many are struggling to do everything from putting food on the table to home-schooling the kids to, yeah, paying rent.

Many residential tenants across Canada have been calling for rent relief for months. On Oct. 1, the Ontario provincial government took a baby step forward, passing a law to freeze rents in 2021, meaning landlords will not be able to issue annual rent increases for a precious 12 months. In British Columbia, too, rent increases have been frozen, until July 2021.

And, in recent months, rent prices across the country have dropped, with average rents across the country down 9.1 percent in November from the average price a year ago. (Toronto saw a 20 percent year-over-year decline.) Supply, meanwhile, has surged, due in part to strict regulations placed on short-term rentals like Airbnbs. This, along with a dip in tourists, led to many of those former short-term rentals then going up for long-term leases in the regular market. So, if you don't plan to move back in with your parents or somewhere a little cheaper outside the city, what option does that leave for you?

One (albeit, big) word: negotiation.

Should you give it a shot?

Sure, rent is not quite the same as a bunch of melons at a market, but a successful negotiation can be done, especially when you consider that a landlord-tenant relationship is a business one. It’s easier for both parties if you stay put.

"I have a very good relationship with my landlord," says a Chatelaine staffer who lives in downtown Toronto. She took note of the shifting market, and spotted a few vacancies pop up in her building that were less expensive than her own unit. "I sent [my] an email referencing one of the vacant units in my building of similar size with a lower rental price, and asked if they would consider matching the price. They responded very quickly and agreed to the reduced rental price. With more unit vacancies appearing in the market now, most landlords understand it would be more of a hassle for them to find and vet a new tenant. It’s easier if there’s something in your own building to reference, but even if there isn’t, you can also check for rentals in other similar buildings in your neighbourhood."

If that doesn't give you a boost, consider this the best time to give rent negotiation a shot with so many others in your shoes.

Now that you've worked up the courage to give it a go, step #1: Do your research

Before you give your landlord a call, get your facts right. First things first: do some digging, and see if there are similar available rental units to yours in your area, or perhaps even similar units to yours in your building that are available for less. The goal is to reduce your existing rent to what is now the new market rate.

It's also worth noting that it's much easier negotiating when you're on a month-to-month agreement, like our Chatelaine staffer, whose rent adjustment was immediate for this very reason.

"If you sign a contract for your lease, you are bound by that and it's very difficult to negotiate until your lease is up," explains Andrew Fortis, a real estate lawyer at Vaughan-based Hummingbird Lawyers. "Once a fixed-term lease agreement expires, it automatically reverts to a month-to-month agreement. So if you’re on a month-to-month, you shop around, you give your landlord notice in accordance with the Residential Tenancies Act, which is 60 clear days of the expiry date. Or you can tell your landlord you've found another place for less, ask if they can work with you on a rent reduction or you've got to give notice. The market is ripe for this right now."

When it comes to landlords, most have a mortgage to pay on their rental property, and rely on rental incomes to finance that mortgage.

"And so a landlord would be inclined to negotiate a reduced rate because it's hard to find a tenant now, and they don't want to sit with a vacant property," adds Fortis. "So have the conversation with your landlord before you do anything, because it would be a shame to find a new place and move—it's a pain in the rear end to move–when there might be another option available to you just by asking."

So, you've done your homework. Time for step #2: Be confident and compassionate

There is plenty of reason to feel anxiety going into a negotiation, but if you've done your homework, you've got no reason not to be confident–and direct.

If you’re comfortable, opt for the phone or even a Zoom session. But if you’re feeling nervous–and why wouldn’t you?–there’s nothing wrong with an email. Come prepared with any references, your credit score, payment history, or any other documents that might be useful.

And be honest. Appeal to their compassion and explain your circumstances, whether you're facing a reduced salary or hours, have lost your job, or are looking after family or a friend. Don't be afraid to say, "I don't want to leave, but for this reason, it's very difficult for me to stay. Is there anything that we can do?"

It’s okay, too, by the way, to negotiate if none of the above applies to you, and you’re just looking for a fair, market-based deal. Again: it never hurts to inquire. In this case, it’s imperative you bring any comparative listings with you, of similar, lower-priced units in your building, or of other available units in your area.

You'll also want to be realistic with your ask. Always ask for more–because this is a negotiation, and you can always meet in the middle.

"I find sometimes people don't realize or appreciate that the landlord-tenant dynamic is an ongoing relationship," says Fortis. "Communication is key to any relationship. By having a conversation, most landlords will look at it and say, 'a) I don't want to lose a tenant, it's hard to find new tenants right now. b) Market rates are going down. And c) I have a mortgage on my property, keeping a unit vacant could cost me money.'"

Plus, he says, there are real estate commissions that can be involved. Landlords may hire a realtor and the realtor charges a commission. This means there's always a transactional cost for both sides and a tendency to weigh them with the market rates. Which also means a negotiation may very well go your way as it might be beneficial to your landlord, too.

So leave any kind of hostility or threats at the door. This isn't The Godfather.

If you arrive at a stalemate, turn to step #4: Incentives

If negotiating rent were easy, I wouldn't be writing this article. Which means, there's a very likely chance your landlord will reject a rent reduction. But if so, not all is lost. Be sure to ask if there might be any other incentives they can provide.

"You can ask for anything," says Fortis. "You can ask for utilities to be paid. You can ask for a rent deferral, or for a month or two free. You can even ask for them to pay your cable or internet bill."

Other options include extending your lease, or requesting a discount on your rent for something like giving up a parking space.

"If you're a good tenant, they will have open ears," says Fortis. "And keep in mind that this negotiation doesn't have to be final. You can suggest a temporary reduction or alternative incentive, and then revisit the matter after a period of months and as things change."