What is "fair" for my renewal - looking for opinions

Hey my brother-in-law said he was leaving his 2 bedrm apartment also in a great area after being there for 3 years.The building offered him to stay and pay 1000$ less!!! They said they don't wanna lose a good tenant..

Do you know what management company owns your brother-in-law's building?

The market is down about 20+% from pre-Lehman. I know of people who were at amazing deals that renegotiated 20%, people that were at OK prices that renegotiated 20%, people that moved from OK prices for 20-30% improvements, and people who just stayed in their good deal with no price change. Conservatively assuming that you were already getting a drop of 10% from pre-Lehman without an amazing deal, I think another 10% is fair. You can push for more, but if I were you and I didn't get at least 10%, I'd feel like I'm being screwed.

Whether or not you get that is another question, of course. Given that you've been in your place for a year and that you probably have children (converted dining room) and that you really like your terrace, you probably really don't want to move. So where's your leverage? I'm sure if you actually spend the effort to work SE or whatever other resources you like, you'll find something at least 10% better. When you see that place that is 20% better and your landlord says "same price", is that motivation enough for you to up and leave? There's your leverage.

So I say you say 20% below. When they ask for a reason, tell them because that's where the market is at the moment. If they don't like, they can wait a month so you can see your other options and get back to them on what you'd be willing to stay for. What are they going to do? Start marketing it at market price now while they're asking you to pay above-market?

At the end of the day, all you're asking for is the same as the free month from last year, plus another 10%, because this is a free market apartment and that's what they'd get for itnon the free market.

how do you feel the flat rent compares to the market now? do you think it's a fair price, regardless of free month/perks, or do you think the flat rent is overpaying? my first thought is that you are lucky they didn't raise the flat rent. we also recently signed a lease, negotiated the price down a bit and got a free month. i would be DELIGHTED if come renewal time they just kept the rent as is, instead of hiking it up. though, if the market falls more between now and then, maybe i would want to ask for a decrease. But, like you, i feel like we made out on the deal. Can't hurt to ask right (or could it)?

BTW - when we negotiated our current lease, and agreed to the free month (instead of further reduction of actual rent), we did so assuming that the LL would use the flat rent rate come lease renewal time. That's just a drawback you should be willing to accept when you agree to a free month(s). It gives the edge to the LL no doubt. That being said, given the market, you could certainly make a strong case for another free month. The landlord still gets to keep the actual rental price high (which they love to do) and you still get a discount. imo, that seems like the best strategy for both parties. It's the course I would take. Good Luck!

I don't think the "market is down" argument works quite as well as "I found a bigger apartment with a terrace for X -10%" ( X being your current rent.)
So start looking for a real 3 bedroom apartment in your neighborhood with outdoor space, to make your counter-offer persuasive.

you should not sign a new lease right now that would raise the rent. You could get a better deal now then when you last signed anyway. Go look around. Dont be a sucka

i think it's hard to use asking rental prices as comps b/c most are inflated. Personally, i think a better strategy would be to explain that the market is still very soft, rents certainly aren't going up, and so you feel that a fairest price is closest to what you paid in Jan '09. If you can actually find larger spaces with a lower ask then you are most certainly overpaying!

You have to be willing to move. In a few instances, I know of cases where the tenant felt like they were getting a bad deal, yet couldn't find a place to move to that met all their criteria. So they end up paying 2007 rents.

"look around" and "be ready to move" are easier said than done. I presume you didn't agree to a lease that you couldn't afford should all the freebies disappear, so it's, as you said, a matter of what's fair at this point. Honestly newbuyer, you don't even need to make a case that the market has declined since Jsn '09, you just need to remind your LL that the market hasn't increased so why should you pay more this year. That seems like a very reasonable position to take.

thanks to all. Helpful comments.

Uwsmom is right - we really don't want to move, because (1) we like the location, (2) we like the terrace and (3) moving is a huge pain, especially with small kids.

Looking around can be done, but is very time consuming, as I learned last fall/winter. The chances of finding a comparable apartment for rent in our location are close to zero - there are simply very, very few of them. The likelier scenario is that we find several options that, on balance are equivalent - maybe bigger and with better finishes, bigger kitchen but with a balcony instead of a terrace in a location we don't like quite as much, or something like that. Tough to make comparisons, and even tougher to use as an argument in a negotiation.

Because of the above, it's also a bit tough to compare the price. Based on what I am seeing, my landlord's current renewal ask is on the high side but not ridiculous. I suppose I'll call them this week and start with the "market is certainly not up, why is my effective rate going up so much" argument. If I have to go to comps and/or threaten to move, I suppose I can do that.

Is anyone else who signed their lease post-Lehman getting renewals? Signing renewals? How do renewals offered/signed today compare to the leases signed in October-December 2008? Thanks again.

" How do renewals offered/signed today compare to the leases signed in October-December 2008?"
First of all forget about leases signed in October-December 2008. Yes, although that would be "post-Lehman" - it was too recently "post Lehman" as landlords where either in denial, where not quick to react, and vacancies did not have the time to accumulate. That is, that a solid argument about the Oct-Dec 2008 lease period could be considered the very height of the rental market. Reading between the lines of your post, I can make an educated guess of which management company you are dealing with. You didn't name it so I won't state my guess. A few more observations about your post:
1) I don't think they sent the renewal notice early - the time frame you mentioned is pretty standard.
2) You renewal is definitly on the high side bordering on the ridiculous. as you mentioned you lost your free month.
3) I was offered a renewal last Spring, same situation (no increase but lost the initial free month perk) and although I loved the place I told them to shove it and got a much better deal elsewhere.
4) It seems like you love the place and dread moving and I think you're hoping that they don't call your bluff in negotiations. But please consider this - they understand your position better than you think (moving with small kids, etc.) and are betting (prrobably rightly so) that you don't want the hassle of moving and will factor that into their negotiations. Also realize that they are dealing with others who have no intention of moving but are fishing for better rents. It is in there interest to hold a hard line with all and let the one move out who was serious about the threat to leave rather than
give a discount to all - even the ones who bluffed.
5) if you renewal borders on the ridiculous this go-round, it will border on the oscene next renewal. Perhaps it's time to bite the bullet now and start saving money because a move is in your future - the only question is do want to go throught the hassle now and save money and get under a more reasonable landlord now or pay ectra and delay the inevitable.
Whatever you choose I wish you luck.

Well-said, EZ, particularly #5. As most poker players will tell you, bluffing is hard work; you'd rather just have the cards. You get called on an empty bluff this year, it makes next year that much worse.

Go see the market (doesn't have to match your place exactly), determine the market price of your place, and determine the renewal price at which you'll be pissed enough that you'll be glad to move. Enter a negotiation as a game of chicken with no backup options for yourself, you're going to get pushed around, IMO.

EZ - interesting post, appreciate the detail in your advice. Some replies:

"First of all forget about leases signed in October-December 2008. Yes, although that would be "post-Lehman" - it was too recently "post Lehman" as landlords where either in denial, where not quick to react, and vacancies did not have the time to accumulate. That is, that a solid argument about the Oct-Dec 2008 lease period could be considered the very height of the rental market."

I am sorry, but this is flat our wrong, and wrong by a lot. Maybe some landlords were slow to react, but by December a whole lot had. I paid very close attention to the rental market between the summer of 2008 and into December (when we signed our lease). In that time, rents plummetted, incentives multiplied like fruit flies, everything became very negotiable, etc. My (anecdotal but fairly extensive) evidence suggests the height of the rental market was between late 2007 and mid-2008. Overall, I would say the rental market was off a solid 10-20% between the height and December 2008 when we signed. I have not paid as close attention since last December, thus my question.

1) Minor point, but I've been renting in NYC for 10 years, and this is the earliest I've ever gotten a renewal notice.

2-3) If I had signed my lease spring 2008, I would agree with you. Because I signed a deal that I am pretty sure would've been unthinkable 3-6 months earlier, I think the renewal is high but not ridiculous.

4) Very, very good point. I've thought of this, and I agree. The only way to really negotiate is to be prepared to follow through on the threat. I'd prefer not to do this, but if the difference is great enough, it well may be worth it. Part of it is the principle too - I hate the feeling of being taken advantage of, maybe even more than I hate the idea of moving.

5) Here's the rub. We only want to stay here one more year in any case. After that, we will probably outgrow the apartment and want to buy our long-term family place (unless we decide to put on a lowball this fall and it gets accepted, but that's unlikely). So I don't care what they do with the rent in 12 months. And by the same token, I hate the idea of moving now, and then moving again in a year.

Anyway, I do appreciate your thoughts even though we disagree on some of them.

probably going to see alot of posts like this in the coming months as all of the free rent options on peoples leases begin to run out and they are left paying rent on an apartment they can't afford without the concessions

I just asked about renewal - they actually told me they were going to raise me $100 a month. I said no go. Got them to have it remain the same. I did rent at a big cut from 2007 rents - about $700-800 less. I then asked for a rent reduction and they said no way and they just rented a smaller apt for $250 more than I pay a month. So I played hardball and lost. I will probably resign bc by the time I factor in moving costs, costs of putting up a wall etc it will be more than I can find a slightly cheaper rent. My apt is big for my rent so I think we're staying unless we can get into Peter cooper but who knows when they will start renting again?

ccharley - so, to be clear, is their offer flat to what you got last year, net-net? Or did you have a free month then, so you'll effectively be paying more now?

Does anyone else have specific anecdotes about renewals signed in october-december 2008?

Quick update on my story - I got the landlord the come down a bit, but it still works out to a meaningful increase. So we're starting to look at other apartments (of which there are plenty, at least on paper). We are still hoping to stay, but would have to negotiate the landlord a ways further down.

And jimhones, it's not a matter of affording (for me and I'm guessing most others). It's a matter of not wanting to overpay.

20% or walk.
anything less and you are a sucker

After, of course, you factor in the cost of moving.

Sorry, typo above making it unclear (I am bad at those). I meant to ask:

Does anyone else have specific anecdotes about recent renewals of leases signed in october-december 2008?

Thanks.

If you're expecting major reductions for a renewal you might be disappointed. It's a game of chicken--landlords know you likely won't want to incur the expense and hassle of moving, so they really have no incentive to lower your rent by much, if at all. I have heard of some reductions here and there but not major drops.

If you're willing to move, that's a whole other ball of wax.

New - yes no incentives. They actually aren't offering them now. I again asked for a decrease and they said no that I have one of the cheapest jr4s in the bldg and they wont' come down. I think at one point they offered 3 months at the gym - never a full month here. I don't want to move either. Wish I could get them down a little but I don't think they are going for it.

IMHO, they will not come down. You had your chance to negotiate when you moved in. The free month is an incentive to get you in, and while you may calculate effective rent for the year by discounting for that month, they won't. I think your best option is to suggest that due to continued softness in the market, you believe a rent of X is fair. They will either accept, negotiate, or decline. If you take too hard a line, be prepared to pack up the circus and move.

My LL offered to renew my lease that expired 10/1/09 at last year's rent. Mind you, I got the renewal letter in July/Aug and negotiated in Sept (I had been away). When I asked for a reduction b/c they had rented an IDENTICAL apt (exposure, layout, size, a floor below) in August at a 15% redux, they agreed to the same reduced rent renewal. I moved anyways to a building, and apt I like more in a better location.

I did a lot of research in lower UWS/upper MTW before moving - 70 apts in 20 bldgs in co-ops, rentals, condos, townhouses and in my own building. I wasn't interested in any of the new bldgs so remote, with their complicated pricing, and used-car salesman tactics. But brokers, landlords were ALL "negotiable" and wanted me to negotiate. Some brokers reduced the asking rent 15-20% (makes me think the asking rent was inflated to expect negotiation), when I was interested, but not smitten.

I also had excellent credit and financials, but no recent employment, and didn't make 40x.

I think that a flat rate renewal may be the norm in many buildings. Our lease runs from November 2008 until October 2010. We've lived here several years so we were sent the renewal notice in June 2008. At that time, oil prices were very high and we thought that we were getting a good deal when we resigned our 2 year lease for a small increase. Obviously, didn't work out that way. I recently went on urban sherpa and nybits and looked up my building and the other buildings that I know in my area to see what the listed market rental prices were and they were all at or slightly above what I'm paying, I checked with our doorman and the apartments mentioned on those sites were the ones availble for rent in my building. It never hurts to try to negotiate a discount- you have nothing to lose. In my own building, the vacancy rate seemed to have remained low so the landlord has a little more leverage.

The short answer is if you're not willing to move, it's tough. Try to at least pretend you're willing to move, and offer on-market comps that seem like they'd be good alternatives.

I'll try to come up with a longer answer -- this is a blog-worthy question if I've ever seen one.

ali r.
{downtown broker and columnist, CBSMoneywatch.com}

Yeah, it's definitely a game of chicken. They know I don't want to move. But I know they don't want me to move (because if I do, the apartment will sit empty, and they'll probably have to offer the next guy a month free, maybe have to renovate, etc.).

cccharley - you didn't answer my question. No free month now. But did you have one a year ago? In other words, will you be paying more net-net?

OTNYC - I see your point, and I know they look at it that way. I don't. Of course, the disconnect makes the game of chicken that much more difficult.

Ali, very interested in your short answer and the longer version, if/when you have time. I go back and forth on whether I am "willing" to move, so it's not exactly pretending, and so far has gotten them to come down a bit. Might see a few apartments this weekend and if we see something we really like for a great price, might take the opportunity to trade up, or check out a new neighborhood, etc., despite the hassle. We will see...

why not play hard ball re the $ knowing your comment #5 is your family strategy anyway? as in try and negotiate the best money deal you can with that card in your hand. moving and looking stinks w/o kids, never mind with them. but to ali r's point, a little move feigning and some intelligensia can only help you. the old "who wants to market a 2 br, 3 br in this enviro with multiple other vacant apts already in the bldg unrented.."

Update: We renewed. Got the price down a few hundred from landlord's original proposal (not as far down as we wanted), and got some other important terms that we wanted.

Honestly, several of the deals we saw were meaningfully better, we were very, very close to pulling the trigger and moving. If we were planning to stay a long time, we probably would have. But we are pretty serious about buying in the next year or so, and going through the huge cost/hassle of moving, especially with kids, just wasn't worth it for just a year.

We got a lease renewal about 2 weeks ago, and we were in the same boat. We got a free month last year, and the landlord wanted us to sign a new lease without the additional free month. We ended up getting a discount, but less than the full 1 month off. We like our apartment a lot and didn't want to move out either. Also the landlord was still offering 1 month off to new tenants.

It is certainly a game of chicken.
And as you arm yourself with comp ammo for the rental market of like kind, yes as other's have posted, if your not willing to move, you have to put on your best act that you are willing.
And keep in my mind as you figure in whatever percentage the market is down (example 20%), the landlord is also calculating how much it would cost you to move and what the bother of moving is worth to you and will adjust accordingly.

My lease is coming up May 1st, so I'd imagine they'll be sending me a renewal some time soon, extremely interested to see what the offer is. I'm in a 1BR in BK Heights, doorman, laundry, gut reno'd unit with dishwasher, paying $2K a month. For various reasons, we (gf & I) can't go above about $1600 a month with our next lease. When we signed back in February they only paid the brokers fee, no additional incentives. We're prepared to move for anything above $1600, which we don't anticipate getting down to. Hopefully the market drops some more, would love to stay in the 'hood if possible.

Renewed flat in January 2009 (yeah, I know we got screwed). LL offered flat a few weeks ago. We have gotten them to give a month free but they wouldn't give the two months we were asking or 6 weeks or a reduction in the base rate. So an 8.3% reduction from the peak with a probable automatic rise in one year does not sound good. Wondering whether on Jan 11 to try to play a greater game of chicken will have results.

Give it up already. If you want a cheaper place, move.

You're being "played" by landlord. Why go another year when the story is going to be the same next year? You pai 10-15% too much last year, you'll be paying 10-15% too much this year, and you're set to pay 20% too much next year by default. Why continue
this relationship?

Exactly. Move.

new I did answer your question. I got no specials or incentives when i moved. They will lower my rent a measly $50 bucks this year. They are now renting for around $200 more than my apt so I think I will resign and look around and I can sublet it legally if I find something better - I'm sure I can get much cheaper on UES. I just had surgery so moving right now is a nightmare. I already have the wall up and custom shades so renting it out shouldn't be a problem. I really thought they would take a couple of hundred off I'm pretty shocked but I'm stuck for the moment.

"I really thought they would take a couple of hundred off I'm pretty shocked but I'm stuck for the moment. "

Why be shocked?
You blinked.
Move or spare us another posting of this next lease renewal when the same exact thing will happen.

"I really thought they would take a couple of hundred off I'm pretty shocked"

Why are you "shocked"? Did you think that because all the Chicken Little "The Sky Is Falling!" articles about this now being a renters' market meant the landlord would just hand you a jar of Vaseline and bend right over for you?

Even in this market, the landlord has the upper hand during a lease renewal "negotiation" -- he knows it's more of a pain in the ass for YOU to move than it is for HIM to find a new tenant.

The rental companies would lose a ton money if they just lowered rent to be nice, there is no good reason to do it. Most people won't move. Especially if kids and school, or people have really "moved in" and customized etc.

But for those who will, now is the best time because demand is lowest seasonally. And worth telling the current landlord this because they'll have vacancy for a bit, plus the costs to find someone new - paying a broker, free months, fixing up the apartment, etc.