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I am a renter, and I have family members who are landlords. I have neighbours who have lost their jobs, and family members who haven’t been paid by their tenants in months. Both sides are facing challenges, and I can empathize with whatever situation you may be in right now. I’m lucky that my financial situation hasn’t drastically changed since COVID began; however, that doesn’t mean that I’m not paying large amounts of my paycheck every month in rent. Growing up in midtown Toronto and now living in Waterloo, it felt as if anywhere I stayed would be a total bargain. With my year-long lease nearing its end, I realize that my previous sentiment has changed. If my boyfriend and I are going to continue living in our current apartment, I plan to negotiate a reduced rate with the knowledge I will be sharing.
Finding affordable housing in Canada has been a challenge for a long time. At the start of the new year in Canada’s large metropolitan areas, homes effortlessly sold 10% over asking, and the bidding wars proved competitive for buyers and advantageous for sellers.
Vacancy rates on rentals continued to be at an unhealthy level of 1-1.5%, meaning that demand far outweighed the supply. In turn, real estate experts expected another year of a dramatic price increase. In January 2020, Rentals.ca expected prices to increase by nearly 7% in Toronto, 5% in Montreal, 4% in Ottawa and 3% in Vancouver.
Although this represented a gloomy picture for young adults trying to afford housing, as of the second quarter of the year, these forecasts are changing. In a national report on rent prices released in May 2020, apartment and condo prices were down 3.2% and 4.6% month-over-month, compared to -0.7% and +1.6% over the same period last year. In Canada’s two biggest markets, Toronto and Vancouver, rent prices declined by 6.0% and 6.8% month-over-month. Could decreasing rent prices be the silver lining of the craziness that is COVID-19?
The price of goods has everything to do with the shifts in their supply and demand. If you have oversupplied a good for your existing demand, you will have to lower prices to entice new customers to enter the market.
Currently, both sides of this equation are showing positive signs for renters across the country. A large population of renters are no longer entering the market at all – immigrants, international students, and seasonal workers across the border – all drastically reduced by the COVID-19 pandemic. Due to financial and safety concerns, many gig workers and students are leaving the market to move in with relatives, where the company and hot meals are all too enticing.
Travel bans have entirely halted the demand for places to stay for a few days or weeks, which could lead to an increase in supply from short-term rentals entering the long-term rental market. Although this may not affect all parts of the country, in low-vacancy cities, this is another good option. Currently, Toronto has approximately 24,000 Airbnb listings online.
Legally, the Government of Canada has banned evictions, frozen rent hikes, and is pressuring landlords to be lenient with their tenants during the COVID-19 pandemic.
Although this may be difficult if you live in a large commercial apartment building, smaller landlords want to negotiate with you. If you have been a reliable tenant up to this point, you are invaluable to your landlord. This situation is hard on them too, and they would much rather negotiate with you then risk losing you.
Proactivity and communication are everything, whether your situation has changed due to COVID-19, or if you feel you are paying unfair rates in the current market situation. Do not take advantage of the eviction freeze by falling off the face of the earth and angering your landlord because these measures may soon end.
Reach out to your landlord via email or phone, outlining your situation and provide a resolution that benefits both parties.
If your situation has changed due to COVID, I would recommend being honest about it. Not all landlords are stone-cold, and most will sympathize with you (legally, they have to). Go over your finances and come up with a reasonable plan.
Consistency is key. Your landlord will appreciate a number that they can expect every month. If you are in a dire situation, I would recommend reducing your monthly rent by two-fold – a permanent rent reduction and a reduction that you will pay back in the future. With any money agreement between two people, you should set up a written contract signed by both parties outlining the reduced rate and when the landlord can expect to get the money back.
If your situation hasn’t changed due to COVID, this could still be an opportunity to negotiate with your landlord due to the changing market outlined previously. Renters have increased power right now, and this could be an opportunity to capitalize on it.
Lay out the facts to your landlord without bombarding them with information. Check out the Rentals.ca May report to see how your rent compares to that in your area. Look up local ads on rent sites like Kijiji and see what similar housing is being advertised for. If there’s a significant difference, this could be used in your favour.
I hope you are staying safe and healthy during these uncertain times.
Option 1: As of [date], I have been laid off from my full-time job and don’t expect to return for some time. I realize you may be facing challenges of your own, but I wanted to start a conversation about negotiating rent for the upcoming months. After analyzing my current finances, I feel that I can reasonably afford to pay $X amount – $X every month. The remaining $X amount will be accumulated and paid over an agreed-upon schedule once I’m able to return to work.
Option 2: I have been researching the changing rental market and wanted to discuss these findings with you. Rent rates across the country are dropping, and with these changing market conditions, I feel that my current monthly rent is not representative of the area. I have found reputable sources to support this that I have attached. Based on my findings, I feel that $X would be more reasonable.
I hope that due to my reliability, we can come up with a mutually beneficial resolution and maintain a good working relationship. I’m willing to write up and sign a contract outlining the specifics of this agreement.
I look forward to hearing from you.
If you are a renter reading this, I hope this has shown you that you have more power than you realize, as it has taught me. I hope you feel more secure in your understanding of the rental market and what options are available to you. I hope you feel confident in your ability to participate in a sound negotiation that includes factual evidence with your landlord. Because now, all that’s left is pressing send!
Oh no, you missed the live webinar! But, good news: Mixed Up Money is pleased to share a free resource for anyone planning for a future child or family.
Mixed Up Money is pleased to share a free resource for anyone looking to cut back on non-essential spending. My most-requested product is these monthly calendars to share on your Instagram story, use as a phone background, or print off to track your spending habits.
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