In just a few months, the rental market in many New York City (NYC) neighbourhoods has flipped from stagnant to red hot.
The value of move-in incentives to entice renters in Manhattan hit the lowest in a year as of July, according to appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. In Brooklyn, new lease signings were the highest for a July since 2008, the report said. Apartments in desirable areas of the borough such as Brooklyn Heights and Cobble Hill are often going for several hundred dollars above the asking price, or have dozens of applicants clamoring for them, sight unseen.
While the rental prices in New York City are much higher than they are in the rest of the country, it’s a similar story of rental demand nationwide. The number of occupied rental units in the US increased in the second quarter compared with a year earlier by the most since at least 1993, according to industry consultant RealPage Inc. Rents on newly signed leases in July also jumped to a multi-decade high.
So how can potential renters win out in an increasingly competitive market, especially in places like New York, where the rental process can be especially frustrating?
There are a few things an applicant can offer to sweeten the deal financially, but it’s important to remember that simply waving more money at the outset isn’t necessarily the best approach, or even allowed. Landlords want renters who are financially sound, of course, but they also want tenants who won’t be high maintenance or difficult. That’s especially true if renters are looking at smaller buildings or townhomes and dealing with owners directly.
Many apartments in New York City come with a hefty broker’s fee, which is as much as 15% of one year’s rent and typically paid by tenants. Last year, apartment owners or landlords were offering to cover the fee (even though it may have been passed onto tenants in the form of a higher rental price), but now, it’s something potential renters may want to offer to split or pay. Also, note that while there was a short-lived ban on brokers’ fees in New York City last year, they were ultimately deemed to be legal.
One tactic that won’t work: Offering several months’ rent up front. Most landlords are prohibited from accepting money in advance under their mortgage, and brokers can’t ask for it, according to 2019 New York state legislation. The same goes for trying to give a larger security deposit.
And even though it’s popular, renters should think twice about submitting an application for an apartment without stepping foot inside. Deals with those renters often fall through when the tenant finally comes to see the place so landlords may be wary, says Jessica Henson, a real estate agent at Compass in New York City.