HOW TO SURVIVE A RENT RISE
- Posted By Prince Lakshman
A rent increase is one news no tenant is giddy to hear about.
Forking out more cash on a rental can happen in the near future. However, with some planning and a realistic view of your finances, you can definitely survive a rent hike.
A wise start to embrace the inevitable is to plan for potential rent increases.
According to Belinda White, who runs a financial literacy resource for smart women, rental rises are governed by laws in each state and the restrictions on how often they can be imposed, and by how much, varies from state to state. Therefore, some protections are in place for you as a tenant.
When renting, it’s best to assume that rent increases are a fact of life every year of two. You’re just lucky if you don’t get one.
When choosing for a property to rent, tenants should think about possible rent hikes. It’s unwise to select a property that stretches them to their limit. There should be a wiggle room in your finances for a possibility like this.
“The bigger the buffer you give yourself with fixed costs like rent, the easier you’ll sleep at night,” White says.
Consistently saving up extra cash can also help soften the blow.
“It’s always a good idea to have an emergency fund for anything life throws up at you; ideally at least three months’ living costs, ie rent, bills and groceries.
“But even a month’s savings is better than nothing and can really help get you out of a pickle, without resorting to costly credit cards,” she says.
You can also negate rent rises by monitoring on the other costs of renting, like insurance, internet, and energy bills.
Try talking down your current provider after a year or two to get a better deal.
A rent increase often prompts most tenants to consider moving to another property, but don’t be impetuous.
Don’t be afraid to negotiate. As annoying as it is to move, it’s also annoying for a landlord to find a new tenant. Check the local market and see if you can convince them of a reasonable amount.
“If it really is a done deal, do the sums. Is the annual cost as much as a removalist? What about the mental stress? It’s going to come down to the questions of can you afford the extra rent and the extra stress?” White says.
Think of renting as a “practice run” for life with a mortgage, if you plan on getting one in the future.
Renting is absolutely a great time to form good habits that set you up for success later. One helpful way is to find a budget system that works for you, like an app, spreadsheet, or a notebook where you can track your expenses.
“It can be a real eye-opener! Try and save money above and beyond the rent for emergencies, but also long-term goals like a home deposit.
“There are advantages of renting, but in the long-term, home ownership can provide the peace of mind that comes with ‘owning your own patch’ and is often a good way to build wealth,” White says.