Owning a home may not necessarily be the best solution for everyone, especially those whose work does not allow them to reside in one place for long periods of time. For some, such as those living alone or with a friend, find it more practical and cost-effective to rent a place rather than buy a house.
There are in fact benefits when renting as it gives you more flexibility in adjusting to work or living environment. But there are those who may be faced with the option to extend their tenancy term for another 6 months to a year, be it work-related or simply wanting to stay a bit longer.
You may also be faced with a rate increase upon renewal, and unless you are prepared for it, you may be faced with a predicament whether to agree or look for another place to move to.
But wait, do take the time to think things through, because while you looking for a new place to rent may be a good option, you might be getting more challenges than what you expect. Sometimes it would seem that finding a new place to rent may be cheaper but ended up costing you more to pay for a removalist, time wasted on searching for a new place, or a predicament where you end up not finding a new place that offers the rate that you were expecting.
Here are some ideas to consider when you are faced with a rent increase situation;
Condition yourself to expect the unexpected
This is one of the major problems faced by renters the first time they look for a place to rent- neglecting the idea that one day rental rates would go up. It is critical that when you plan to rent out a place, economics also play a huge role in rent rates, this means that as time goes by or prices of commodities go up, so does rent.
Normally, rental markets average one or two rate increases once or twice a year. This has to be always considered, even if you started out renting the place at a very low rate.
Always check tenancy contracts, because rate increases are stipulated in lease contract agreements, so you may be able to expect and anticipate it. Industry standards often place increases between 3% and 5%.
Always make sure you can afford it
Never underestimate the power of budgeting. If you are already renting out a place, make sure that the rates do not go beyond what you can afford. Statistics have shown that your budget for rental payments should not exceed 30% of your income.
There are property managers who would often inquire about income and would factor the 30% rule on your rental budget. As a good practice, make sure that you never outstretch your budget for rent beyond 30% of your net income.
Make a habit of saving before spending
Many financial advisers agree on the idea that it is always ideal to manage your finances properly and one of this is to prioritise saving before spending. Consider your savings as money that you pay yourself and dispensing it appropriately through a realistic budget plan that focuses on your regular obligations such as utility bills, groceries, transportation, and rent.
Always set aside money for these things first before considering spending money on non-essentials or luxuries. Stay away from credit and spend only money that you have. This way when you have set aside extra money, you will be able to anticipate rent increases as they come.
Talk to your landlord or property manager
It is always prudent to seek out your property manager ora landlord in case you are hitting a wall on your rate increase. It is never always a closed book for many if not most property owners to discuss options with their tenants.
As a tenant, you must also understand where your landlords are coming from, considering that a 3% to 5% increase would only suffice to cover inflation or market value of the property, for which they also pay taxes and other duties for renting out properties.
You may negotiate for flexible terms or an instalment plan to cover the increase adjustments, but always make sure that you anticipate coming up with a compromise and not a one-sided solution.
While rent increases are one of the major challenges of renting a place, it is not a problem that cannot be addressed. With careful planning and budgeting, you may be able to handle any rent increase situation without stressing yourself.