The coronavirus pandemic has pushed Deborah Pusatere to convert all her tenants’ one-year leases into rolling month-to-month agreements.
The landlord in upstate New York oversees 80 apartment units. When a tenant’s lease is set to expire, she offers them a more flexible contract to move out at any time with a 30-day notice.
“A lot of people are still losing their jobs,” Pusatere says. “They don’t know if their jobs are coming back. So I don’t want someone locked into the lease if they need to relocate to another state, or have to move for a job opportunity in a month.”
Pre-pandemic, there was great value and security in longer-term leases for both landlords and tenants. Under a typical yearlong contract, residents have more time to make their space feel like home, while property owners avoid lost rental income and vacancy costs.
But that framework doesn’t make sense for some renters and landlords in a post-outbreak world where financial uncertainty looms over the economy.
Property owners set on cutting losses say they are offering more flexible agreements than they have since the financial crisis. And tenants who want the freedom to move if the pandemic flares up are asking for terms and concessions that would’ve been out of the question before the coronavirus gripped the nation.
Much of the renters’ leverage stems from people temporarily fleeing urban centers for more rural pockets of the country, experts say.
“There was a surge of new, short-term leases in the spring, and it was fear-driven,” says Candace Adams, the CEO of Berkshire Hathaway HomeServices for Connecticut, Rhode Island, New York and New England.
“There was an initial wave when COVID hit due to so many unknowns. Then, when the protests started in May, we saw many more people coming out into the suburbs looking for short-term rentals.”
Most residential leases are signed for one year at a time, with an opportunity to renew, experts say. However, data suggests that a shift is happening.
A July survey from the National Apartment Association found that two-thirds of landlords are offering shorter-term leases to at least 10% of residents during the pandemic. That’s up from a July 2019 average of 7.3%.
“That’s a pretty significant rise,” says Paula Munger, associate vice president of research at NAA. “It’s all about flexibility right now, and owners of apartment properties are keenly aware of that. The more flexible they are with residents, the longer they’ll stay.”
Property owners are also waiving added fees that are typical with short-term rental agreements, but it’s hard to know how long these trends will stick, Munger adds.
Some began offering flexible payment plans as the nation’s unemployment numbers ticked up, experts say. And many adults sought out shorter-term housing agreements as the shift to remote work pushed them to reevaluate their living arrangements.
Deals and discounts
Hailey Bermel, 23, and her two roommates weren’t ready to give up their four-bedroom apartment outside Boston when the lease was up in June. They saw prices drop on comparable units in the area, took a list of discounted places to their landlord who agreed to knock $800 per month off their rent for the year ahead.
“It felt amazing when she said ‘yes.’ I took a victory walk around our street,” Bermel says. “It was awesome knowing that I could stay here with a landlord I have a good relationship with.”
Experts say property owners are more likely to agree to discounts and concessions when it’s time to renew in order to keep the tenants they have. But renters should play an active role in getting terms they’re comfortable with.
“No one is going to come up and ask if you need help,” Munger says.
In June, Mackenzie Gallas, 27, received a month of free rent in Brooklyn, New York, after some back and forth with her landlord. The leasing office emailed offering half off one month’s rent if she renewed.
She counteroffered after noticing an unusually high number of empty apartments in her building.
“I’m happy with the deal we got, but I think we could have negotiated a little bit more,” Gallas says.
For those on the market for a new apartment, the deals made available depend on how in-demand the unit is, according to Natalie Frazier, a real estate specialist with Sotheby’s International Realty.
“If it’s a really well-priced place, in a spectacular building or in a really a great part of town, people are still for people clamoring for it,” Frazier says. “So landlords don’t have a reason to offer anything extra.”
But some landlords say ‘no’
While some landlords may be in the mood to bargain, not every renter gets the deal they’re after.
“There are some landlords showing a lot of flexibility and compassion during this time. But that’s really the exception,” says Allia Mohamed, co-founder of the tenant review platform Openigloo.
Mohamed tried negotiating her rent in the middle of her two-year lease because of the pandemic, but the landlord in New York City wasn’t budging.
“I sent them a note saying ‘I see you’re offering these really deep discounts on empty apartments right now. Would you be open to offering those same concessions to me?’” Mohamed says. “The answer was flat out ‘no.’”
Experts say it’s harder to get flexible terms when you’re in the middle of a lease, the legally binding contract that you signed before moving in. Landlords say some tenants have abandoned their apartments mid-lease during the pandemic, but that doesn’t let the renters off the hook.
“You are still legally obligated to fulfill your lease. You can’t just get out of it. Leaving doesn’t mean you don’t still owe the money,” says Sally Michael, a partner at the Saul Ewing, Arnstein & Lehr law firm in Boston.
Landlords say more they’re willing to work with people who can prove that they’re in a difficult financial position. Some states like Massachusetts, New York and California have a moratorium on evictions in place, so tenants facing financial struggles have longer to find ways to cover their rent before they can be kicked out.
Regardless of the situation, it’s worth having a discussion with your landlord, experts say.
“We’re just seeing a lot of out-of-the-box agreements. We’re in extraordinary times,” Munger says. “So, yes, approach your property manager and ask what the options are.”
Published by USA Today