Landlords are offering tenants huge concessions to sign leases and then pay the agreed-upon rents, but it may not be for the reasons most readers would expect. According to a Zillow study released last week, landlords are offering rental concessions and attractive “bonus” options including multiple months of “free” rent rather than permanently lowering rental rates. In fact, six weeks of free rent is the most common concession in the market today, with 90 percent of all concessions including this option. Many landlords are also offering tenants flexible terms on month-to-month rental agreements in hopes of preventing residents from staying in place for months after losing their jobs and not paying rent.
“A lot of people are still losing their jobs [and] don’t know if their jobs are coming back,” explained one upstate landlord who oversees 80 apartment units. “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.”
Many property owners say they feel more secure with shorter leases at present. Candace Adams, the CEO of Berkshire Hathaway Home Services in Connecticut, Rhode Island, New York, and New England, called the surge in short-term leases this past spring “fear-driven,” explaining people were leaving urban areas in droves but do not necessarily plan on staying permanently. She added that social unrest in many urban areas is contributing to the short-term lease trend. “When the protests started in May, we saw many more people coming out to the suburbs looking for short-term rentals,” Adams reported.
The National Apartment Association (NAA) recently released a study indicating about two-thirds of landlords are currently offering at least one in every 10 residents shorter-term leases during the pandemic. That is up about three percentage points over a year ago. “It’s all about flexibility right now,” said Paula Munger, associate vice president of research at NAA. However, she warned, tenants need to communicate with their landlords rather than waiting for the landlord to come to them. “No one is going to come up and ask if you need help,” she explained.
Overall, multifamily renters are more likely to get concessions on their leases right now than those in single-family properties. Nearly two-thirds of multifamily renters reported receiving at least one concession in April, while fewer than one-third of single-family respondents had received a concession. “This is consistent with Zillow research showing urban rents have been harder hit than rent in the suburbs during the pandemic,” said Zillow Group economist Joshua Clark. “In a softer rental market, landlords are trying to push the right button to bring renters into their space.”
The Zillow survey showed “free rent” to be the most common concession, followed by access to free parking, gift cards, and reduced or waived security deposits.
Are you offering rental concessions at this time?
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