How to negotiate a rent increase with your landlord?

Many landlords prefer to increase the rental amount annually at the time of lease renewal, generally, maintaining a 10 percent minimum hike. However, regular payments and good upkeep of the property, among others, can help you negotiate a rent increase with your landlord. Key of Dream elaborates more on such tips to help you ace rental negotiations.

Every year, Mr. X pays more rent to stay in the same house in North Delhi. Although he has been living in the same property for over seven years, he has not yet found a way to negotiate rent with his landlord, who following the usual practice, raises the monthly rent by 10 percent every year.

Almost all tenants, have to face the above situation. While it is a common practice among property owners to increase the monthly rent by 10 percent annually, some tenants are fortunate enough to get away with a smaller or negligible hike. Does this mean that the art of negotiation gives them an edge over others? Also is the yearly rental hike mandatory? Let’s find out.

Is it compulsory to increase rent every year?

No, rent increments are not compulsory. Increasing the rent amount is solely at the landlord's discretion. Moreover, tenants have the right to discuss the terms and conditions of this clause before signing the lease. As per the Maharashtra Rent Control Act, landlords are entitled to increase the rent by four percent annually. In addition, the Delhi Rent Control Act, which covers properties with a rental value of up to Rs 3,500, states that a landlord can increase the rent by 10 percent only after three years from the date of letting out the premises.

How to up your negotiation game?

In the first place, a tenant must never assume that the rent amount quoted by the landlord is the final figure as there is always room for negotiation. Experts also suggest that a tenant should understand that some negotiation techniques are worth trying, irrespective of market conditions.

Mr. ABC, a resident of XYZ Delhi, has been paying the same rent for the last three years. This implies that there are certain ways to convince your landlord to retain the monthly rent. These include-

Referring to your payment history

Mr. Ritesh Sinha, Property Consultant, Key of Dream, Indirapuram, says, “Try to enlighten on the payment history and emphasise that you have always paid the rent on time or before the due date. At the same time, remind the landlord that you have never asked for apartment maintenance in the past and have managed it on your own.”

Proving your worthiness

Show your landlord that you have always been a good tenant. “All landlords love well-maintained homes. You can try for a rebate on rent by keeping the rented apartment as beautiful as you can. This is because the cost of renovation for a landlord can be more than his/her rental earnings.”

Dividing the expenditure with the landlord

“Ask the landlord to pay for the apartment maintenance. This can help bring down the overall monthly expenditure for the tenant at the time of increase. Further, you must try to meet the landlord in person instead of having indirect talks with brokers. You can easily save Rs 5,000-12,000 in yearly rental by sitting and negotiating”.

Extending your lease

“Ask the landlord to extend the lease for 2-3 years instead of one year.” This can help ease the renting worries of the landlord for a long period, and thus, he may provide some discount on yearly hikes.”

Compare rental values in the neighbourhood

Engage in some research to know the prevailing rentals in the locality, in order to ensure that you are not paying higher rent. Talk to real estate brokers in the area to determine the minimum rental value. If you are paying more than the average rent in the area, talk to your landlord and tell him the statistics when he proposes the rent hike. “Alternately, you can also tell the landlord that your friends are living in better apartments than yours and paying lesser rent. However, be polite in your communication to avoid things going sideways”.

Precisely, negotiations are likely to be more fruitful in a renter’s market. If the market dynamics are lopsided towards landlords in a way that the rental demand is huge but the property supply is less, then the odds of being successful are less. However, if it’s a renter’s market, with more property supply and fewer takers, then the landlord would not like to capitalise on an opportunity to increase rent against the odds of losing a tenant. A tenant can bargain for the right amount by incorporating a few basic negotiation techniques. However, understanding the external factors is crucial to avoid losing the accommodation.

Frequently Asked Questions

What is the standard rent increase per year?

In India, landlords can increase the rent amount by 10 percent after the lease expiry. However, this is usually at the landlord's discretion. You can negotiate the rent increment terms before signing the rent agreement.

Can the landlord force the rent increase on the tenant?

No, the landlord cannot force the rent increase on the tenant before the expiration of the lease agreement. The increase will only hold valid if it was agreed by both landlord and tenant at the time of renting the property, and the same was documented in the rental agreement.