negotiate lease renewal (can you/how to)

The way leases are typically written, you are just liable for any reduction in rental income. Termination (per the response from the LL) merely costs you an additional $4K, but does not reduce your liability. Sounds silly.

You should also know that all leases may be assigned or subleased, and LL may not deny assignment / subletting unreasonably. Any restrictions placed on subletting in your lease contradicting this are legally void:

http://www.housingnyc.com/html/resources/attygenguide.html#7

So rather than terminate per the $4K being proposed and leave it to the LL to rent or not rent it to someone else to cover the remaining 6 months, you'd be better off leasing for the full year and then subletting for the last 6 months. If you have a well-priced apt (a big if possibly), throwing in $4K in total rent reduction (i.e., $666 per month for 6 months) will go a long way in finding a subtenant. These 6-month deals typically suck, of course, for anyone wanting to stay longer than 6 months because the LL will jack up the rent well beyond fair market value as soon as the sublease is up, so they have to be priced very cheaply to get a subtenant. People looking for 6-month subleases w/ no intention of extending have the pick of the litter.

Knowing the above is obviously important in stepping into negotiations. Reveal your knowledge of it opportunistically -- the LL is operating under the assumption that you are clueless given that their offer is worse than what is spelled out in a standard lease.

But your best bet in any negotiation is to have credible options in your pocket. Often the best deals available are temporary 6-month situations (for reasons outlined above), sometimes as subleases of a 1-year lease, sometimes as an owner being away for a while. I would find one as backup -- finding something 30% better-priced is not unheard of. Although the prospect of moving twice in 6 months may not seem all that attractive, it's an option that you can monetarily weigh against the prospect of staying at the 10%-higher rent and having to find a subtenant to deal with this 6-month liability over your head.

You can always try. Right now the negotiations are in the landlords favor since the vacancy rate is so low, but if your unit is overpriced and you've been a good tenant then you might have some leeway.

If the 10% hike in rent is not completely out of the question for you, I'd counter back telling them you'll take the full-year lease with that (rather high) increase as long as they allow you to terminate the lease penalty-free with 60 days' notice.

Remember that if you choose to move now to a temporary place for 6 months you'll incur the cost of moving twice, PLUS the headache and stress moving causes. So these things need to be considered in your decision making.

If at all possible I'd steer clear of the hassle of trying to find a subtenant.

In case it wasn't clear in my post, I agree with bramstar's suggestion as a response and/or preferred outcome. I'm just suggesting you explore other options beforehand: don't go to a gunfight holding a knife.

When exactly is your target move-out date in 6 months? I.e., are you asking for this to become a fall vacancy vs. a winter vacancy?

thanks for your responses. Very helpful!

We'll be moving out in the winter. That was one of the arguments used by the LL to not allow us to have a 6 month lease.