NOW Magazine: How to negotiate a rent reduction

Posted October 29, 2020

Q: My hours have been cut during the pandemic and rent has gone down in my area. How do I negotiate a rent reduction with my landlord?
Over the past several months, Toronto rent prices have dropped and supply in the rental market has skyrocketed. COVID-19 is a major contributing factor, with more people moving back home or to cheaper, remote locations while they work from home.
Dana Senagama, a Toronto economist at the Canadian Mortgage and Housing Corporation, says the trend of more units hitting the long-term rental market started in late 2019. Then the city announced stricter Airbnb regulations for people who list their principal residence on short-term rental sites.
“We started to see a lot of these investor-held units being off-loaded onto the market. The investors were trying to sell it or they were going to list it as a long-term rental,” she says. “Then came COVID, and then it kind of compounded everything that already has been taking place.”
As the price of new rental listings continues to drop in most Toronto neighbourhoods, tenants may be wondering if they can negotiate a rent, especially considering the financial burden the pandemic has placed on many people.
Geordie Dent, the executive director of the Federation of Metro Tenants’ Association, says negotiations will be easier if you moved into your place recently.
“Rents are only going down compared to, say, at the start of this year, but they’re still quite a bit higher than 2017,” he explains. “You’re only really going to be able to take advantage of this in any kind of significant way if you moved recently.”
Landlords might consider rent incentives rather than a monthly reduction
If you moved recently, Dent says you can try a couple different tactics.
One is a more basic monthly rent reduction: you settle on a new rate with your landlord. The other is an incentive.
“A number of landlords are offering incentives to get you to rent. These have been common in Ontario throughout history, just not at this time,” he says. “You could use that and say, ‘Hey, I know you don’t want to reduce my rent, how about a month free?'”
While a rent reduction largely depends on your landlord and what they’re willing to negotiate, Dent says you should read up on local trends to make your case more convincing.
“The best thing you can do is really understand what the market is like in your area,” he says.
Dent recommends taking a look at what the rental rate is in other units in your building, on your street and in your area. Depending on the landlord, they might already know if units in your area have been on the market for months, or if rent is going down. But it’s worth mentioning these factors nonetheless.
“Landlords haven’t started reducing rent out of the goodness of their heart. They’re doing it because they see the market has changed,” he says. “Even if they hadn’t been looking themselves, it might get them to investigate and realize that it’s better to maybe give you a couple hundred dollars off your rent today than to have no one in there for a month.”
Explain your situation, let your landlord weigh the risks
Jonathan Kleiman, a business lawyer who deals with tenant and landlord disputes, and is a landlord himself, says a “rational” conversation to negotiate a rent reduction with your landlord will go over better then aggression or threatening to leave.
“The best thing you can do is just explain the situation,” he says.
Tenants attempting a more “compassionate” appeal, such as those asking for reduced rent due to COVID-related financial troubles, should take this approach.
Depending on the landlord, he explains, they may realize that offering a few months of free rent is better for them financially than an overall rent reduction. Additionally, if landlords refuse to lower your rent, they’re taking a risk if the tenant really can’t afford it and simply doesn’t pay it.
“The reality is, it might take an incredibly long time to actually kick a tenant out, and for landlords, it may be better to get a check for 75 per cent every month then have to wait 18 months to get an order from a court that you have to enforce saying the tenant owes you money,” Kleiman says. “That may take you forever, maybe years before you ever see a dime.”
Ask first, even if your landlord is unlikely to agree
Kemba Robinson, chair of the York West chapter of the Association of Community Organizations for Reform Now (ACORN), is encouraging tenants looking for a rent reduction to organize, because COVID-19 is an especially dangerous time.
“There are some tenants who have been living in their units for a very long time and their rent is way below market value right now. So the landlord sees this COVID situation as a way to evict long-standing tenants and raise the rent,” she says.
Housing advocates have been calling on the city to reinstate the residential eviction ban the province implemented at the beginning of the pandemic.
Even for long-standing tenants, it’s worth asking for a rent reduction if that’s what they need, she explains.
“The alternative is to live on the street, so we can’t think about it being too risky, or we have too much fear to ask for a rent reduction. Because if you don’t, you might end up living on the streets.”
Dent emphasizes that if a landlord does agree to a new reduced rent rate, they can’t arbitrarily decide to take that away, even if situations change for you financially.
“If the landlord agrees to reduce your rent, they can’t just take that off and just change that tomorrow,” he says.
“You pay for rights, and you pay for certain benefits and amenities that you get not because the landlord feels like it, but as a consequence of paying for rent,” Dent says. “So when a landlord offers you something and they agree to it, they have to honour that agreement.”
About Resident Expert
Resident Expert is a column about renting, buying and owning in the city. Send your queries to realestate (at) NOW writers will talk to relevant experts to get the answers. Letter writers will remain anonymous. Read previous columns here.
This column is not legal advice. You should not act or rely on the information provided. To ensure your interests are protected, retain or formally seek advice from a lawyer.

Article by Julia Mastroianni for NOW Magazine


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