How can tenants cut rental costs?

The demand for rented homes is on the rise in many key cities, including the top metros such as Delhi and Bangalore. One of the main reasons for this trend is the availability of employment and educational opportunities. As more people move to other cities, the demand for housing increases. Factors such as a favourable location due to the presence of metro connectivity, proximity to workplaces, and availability of amenities increase the monthly rental costs for a tenant. In most cities, landlords increase the rent by 5-10% every year. This could increase the financial burden for tenants. With other household expenses to meet, managing the steep rent increases becomes crucial. In this guide, we outline some smart strategies that tenants can adopt to save on their rental costs without negotiating on their quality of life.

#1. Choose the right property

To steer clear of the burden of high rental payments, prospective tenants should make the right choices from the start. It is essential to assess one’s space needs and select a suitable property. A larger space could mean higher rental costs. Besides, they must assess the available options when house hunting and have a minimum of three or four options to compare and choose. If someone is already living on rent and wants to lower the rental costs, it is wise to consider downsizing to a smaller unit.

#2. Negotiate monthly rent

When planning to negotiate rent with potential landlords, it is necessary to have a fair idea of the market trends. Prospective tenants must assess the neighbourhood they are planning to move to and research the prevailing rent for different property types and BHK configurations. Rents will differ based on whether it is a standalone property or a unit in a gated society. Further, it is possible that the rental rates may vary in the same location based on the amenities, construction, proximity to roads, etc. This market knowledge will help tenants to negotiate their rent effectively.

Existing tenants can try to seek rent reduction by highlighting a good tenant history or property maintenance. Tenants must work on building a good rapport with the landlord while maintaining a professional attitude, which can be beneficial. If one has been a reliable tenant, the landlord may be likely to accept the request for negotiation at the time of renewal.

#3. Negotiate additional charges

When it comes to reducing the monthly rental costs, it is not limited to the rent amount. There are other charges that adds up to significant expenses for a tenant. Tenants should identify these expenses, which could include maintenance charges, parking fee, etc. and negotiate them with the landlord. Both parties should discuss the clauses related to maintenance responsibilities, including repair costs at the time of signing the rent agreement. Typically, landlords are responsible for major repairs for the house. Understanding one’s rights and duties as a tenant will bring clarity.

#4. Sign agreement for a longer term

A short lease period could imply frequent rent increases. Rent hike of 5-10% every year could result in significant expenses for the tenant in the long run. Generally, rent agreements are signed for an 11-month period. This is typically done to avoid payment of registration costs, which becomes mandatory if the rent tenure is one year or above. However, to avoid frequent rent increases, tenants can ask their landlords for an extension of the rental agreement to two or three years. However, it is also necessary to evaluate the period the tenants plan to stay. If they break the agreement early, there could be penalties to be paid. So, they must check the rent agreement clauses.

#5. Move to affordable localities

Rental costs are directly influenced by the location. Rental rates tend to be higher in premium localities such as those near city centres and business districts or arterial roads. Similarly, proximity to a metro station or any upcoming infrastructure project could drive rental prices. Tenants looking to reduce their burden of rental costs can think about moving to more affordable neighbourhoods. Residing in a less central location could mean more commuting but less rent. However, it is crucial to analyse one’s commuting expenses and savings on rental costs to see whether it is a wise decision.

#6. Consider sharing rented accommodation

Another strategy that could work for single individuals or students living on rent is inviting a roommate to share the rented accommodation. If the property has enough space and one wants to lower their rental costs, sharing the rent amount and other monthly expenses with a roommate could result in substantial savings while allowing one to stay in a premium neighbourhood.

For this, it is important to discuss with the landlord and draft a new rent agreement. It is also necessary to check the clauses related to subletting of the property.

#7. Go for an unfurnished house

Students and working professionals typically prefer renting studio apartments, which are normally available as furnished spaces with appliances. This could significantly increase the monthly expenses for such tenants. A cost-effective way is to rent an unfurnished apartment and buy only the basic furniture. This will be convenient when shifting to another accommodation later and save existing rental costs.

#8. Adopt ways to lower expenses of utilities and amenities

Utility expenses add up to significant monthly costs for a household, especially if the resources (water and electricity) are not managed properly. Tenants can adopt some smart ways to reduce these expenses by decreasing monthly consumption. For example, during the day, one can make use of natural light and reduce electricity usage. Turning off appliances, lights, fans, etc., when not in use can save energy bills. Moreover, one can install energy-efficient lighting, such as LED bulbs, which can significantly reduce electricity bills. Further, existing tenants can reduce their overall expenses related to streaming service subscriptions, access to swimming pools, gym memberships, etc.

#9. Leverage rental payment platforms for savings

Nowadays, many digital tools and online platforms allow tenants to pay their rent and earn attractive discounts and other benefits. Rent payments through traditional methods like cash payments, cheques, etc., are slowly being replaced by the modern, faster way of online rent payments. Through these online platforms, tenants can conveniently pay their monthly rent to their landlords and save around 10% on the amount through cashback, other promotional offers, etc. For example, rent payments through credit cards allow tenants to earn cashback. Further, tenants can keep reminders on their phones or online or automate their rent payments to avoid any delays or late fee charges.

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There are plenty of ways in which tenants can look forward to earning substantial savings on their monthly rent payments. Here’s one useful tip to keep in mind. Make sure to document every communication you have with the landlord. This will avoid potential disputes or misunderstandings later.

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