How to negotiate down your rent increase in Pennsylvania and New Jersey
By knowing their rights, understanding the market, and more, tenants can be better equipped to negotiate a lease renewal in the Greater Philadelphia market.
Spring and summer are traditionally the busiest times in real estate, for both homes and apartments. Home shopping is more pleasant in the balmier months, moving is typically easier, and longer, sunnier days tend to give people more time to search for new digs.
Yet whether someone is hunting for a new home or staying put, tough decisions could await many this spring. For apartment tenants who found a home during the busy months of last year, lease renewals are likely approaching. And that could mean rent hikes.
But a landlord's asking price is never final — especially in today's market. Here are some negotiating tips.
Know your rights
Before a landlord can increase rent, both Pennsylvania and New Jersey mandate that a lease must be expiring; rent cannot be changed during an active lease. In addition, both states say, landlords must provide advanced, written notice of any rental price change.
Often, individual leases dictate how far in advance landlords must notify tenants — typically requiring 30 or 60 days. But even if a lease does not specify, both states, to some extent, do. New Jersey requires landlords to give a 30-day warning of a price change before a residential, market-rate lease ends. And although Pennsylvania has no law explicitly requiring a rent-increase notice, it can be argued that landlords must give a 15-day warning for leases lasting one year or less, and 30 days' notice for longer leases, according to George Gould, a senior attorney at Community Legal Services of Philadelphia.
Philadelphia is even more specific: Unless a lease stipulates a longer period, the Philadelphia Code requires landlords to notify tenants 60 days before they increase rent for year-to-year leases, and 30 days before for shorter leases.
If a landlord does not, Gould said, "they cannot increase the rent."
When it comes to actually raising the rent, Pennsylvania also does not stipulate how much of an increase is lawful for market-rate units — meaning, in theory, that landlords can hike rent as much as they want. New Jersey, too, has no statewide law, though nearly 100 municipalities have enacted rent-control ordinances that set increase limits.
New Jersey does, however, stipulate that rent increases may not be "unconscionable." Though no formal definition of "unconscionable" exists, Legal Services of New Jersey interprets it as any increase that is "extremely harsh" or "unreasonable." In some cases, the nonprofit says, that could mean a 20 percent hike, or even a 5 percent increase if the building's conditions are very bad.
Understand the market
Philadelphia, in particular, has experienced an unprecedented housing boom in recent years — 6,500 new apartment units and condos are expected to be built in Greater Center City between just 2016 and 2018 — meaning there's more supply than ever for renters to choose from.
Much of that inventory, including in the suburbs, has been high-end apartments, the kind that demand prices greater than $3 a square foot. And while such inventory has forced prices to jump, many buildings are providing "concessions" — a month of free rent, for example — to lure tenants. Accordingly, the actual price of renting is often cheaper than advertised.
But concessions are not the only thing working in tenants' favor today, especially in Philadelphia. According to real estate data company REIS, the vacancy rate in "Center City"— defined by the company as Washington to Girard Avenues, and from river to river — was 7.6 percent in 2017's fourth quarter, up from 5.2 percent two years prior. (The rate has, however, declined from 10.3 percent last year.)
Meanwhile, rent growth has dipped, while competition is up.
"The pace at which landlords are pushing up Philadelphia apartment rents has been gradually easing over recent years," said Adrian Ponsen, a Philadelphia market economist for the CoStar Group, a real estate information company. "According to CoStar, average apartment rents in [Philadelphia] rose at a rate of 1.6 percent year-over-year at the end of February 2018 … almost half the pace of the 3 percent average rent increase" in 2015.
As a result, tenants should study the market, including average prices in the neighborhood or in comparable buildings. And, simply, ask (nicely) to negotiate. Landlords may negotiate with reasonable, informed residents.
Remind them of your record
"In the business of renting apartments, it's very costly to turn over tenants," said Allan Domb, a member of Philadelphia City Council and a real estate broker. Turning over a one-bedroom unit, including repainting, carpet shampooing, and cleaning, can cost $500 to $600, Domb said. And searching for a new tenant takes time — and money.
Landlords who find tenants through real estate brokers often must pay the agent a commission of one month's rent. "Landlords really do not want to pay that one-month commission every year," said Alan Nochumson, a Philadelphia real estate lawyer.
A tenant who pays on time, maintains the apartment, and complains infrequently should remind a landlord of that. Landlords would rather keep well-behaved tenants than pay turnover costs to find an unknown tenant.
Make a deal
Often, offering to sign a longer lease can bring the monthly price down. Or, mom-and-pop landlords may reduce the price if a tenant offers to pay multiple months upfront, thereby reducing the risk of missed payments.
And if that does not work, ask whether a landlord will budge elsewhere, such as on waiving a parking fee or prioritizing maintenance. Your landlord may be willing to boost your request to the top of the repair list if you agree to his or her rent terms.