U.S. Rents Are Soaring. 3 Things to Do if Your Lease Is Coming Up for Renewal
Renters are paying more these days -- and many are busting their budgets just to keep up with housing costs.
- U.S. rents rose 10.2% in September for single-family homes.
- If you're reaching the end of your lease, figure out how much of a rent hike you can afford.
- Consider other options, like negotiating with your landlord, to keep your costs down.
No matter where you live, there's a good chance rent is one of your largest monthly expenses. And if your lease is coming to an end soon, you may need to prepare for your housing costs to climb.
CoreLogic reports that as of September, U.S. rents were up 10.2% on a national level compared to where they sat the previous year. So if your lease is expiring in the coming months, your landlord may attempt to raise your rent. If you're concerned that will happen, here are a few essential steps to take.
1. See how much of an increase you can afford
Maybe you're currently spending $1,000 a month on rent, and you're convinced your landlord will raise that to $1,100 once your lease comes due. If that's an amount you can afford to spend, you may not need to panic (even though you probably don't want to see your rent increase.)
Take a look at your budget to see how much wiggle room you have. If you're getting a raise in the new year but have a lease expiring in February, your higher paycheck may take effect before your housing costs go up, making a rent hike manageable.
It also wouldn't hurt to see how your savings account is looking. If you can't really afford a rent increase based on your income but you love where you live and don't want to move, dipping into your savings a tiny bit may not be unreasonable.
As a general rule, your earnings should cover your living expenses. But if staying in your home following a rent increase likely means maxing out your paycheck and ending up $20 or $30 short each month, you may be okay to dip into savings if you have many thousands of dollars socked away.
Right now, rents are up across the board, but they could come down in the future. So if you need to tap your savings to get through, say, the next year, that's not a terrible thing if the money is there and you have plenty left over for emergencies.
2. Talk to your landlord before you're given a new lease
Your landlord may have every intention of raising your rent. But if you make it clear that's something you truly can't afford, your landlord might reconsider -- especially if you're a respectful tenant who's been paying rent on time consistently for a year or longer.
Your landlord may also be willing to negotiate the amount of your rent hike. Say your landlord's plan is to raise your rent by $60 a month. If you explain that your paycheck just can't cover that, your landlord may agree to a $30 increase instead.
3. Look into your options for moving
If you're convinced your rent will increase in the near term to the point where you can't afford it, now's the time to start researching other rentals. It may be the case that moving to a different neighborhood will do the trick of helping you snag an affordable lease. Or you may need to look at downsizing to a smaller living space.
However, there is a cost involved in moving -- or at least there can be -- so you'll need to factor that into your plans, too. If your rent will be rising by $50 a month, you'll spend $600 to stay in your home for 12 months. If movers will charge you $600 to relocate your belongings, you might as well stay put if you like your current home and can find a way to scrounge up that extra money -- perhaps by getting a side hustle.
That said, if you have little furniture and helpful friends with larger vehicles, you may be able to move for free. Take some time to see what options you have.
Soaring rent prices could burden a lot of people whose leases are coming due, especially given that everyday costs like groceries and gas are also up. If you think you're in line for a rent hike, take these steps to map out a game plan and minimize that blow.
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