Real Estate Matters | Rents have dropped. What happens when my contract expires? How do I approach my landlord?

Juliet Risdon is a Director of JML Property and a property investor.
Having established the company in 1994, JML Property offers Investment Property & Homes. It specializes in managing properties for owners and investors, and providing attractive and comfortable homes for tenants.

Rents have certainly come down over the past months.
The lowering of rents started last year as One Oasis launched, and suddenly an over-supply of housing had an effect on the rental market.
Later in the year, as positions were cut and projects delayed, enough people started leaving Macau to tip the balance in the tenants favour once again.
A question we are asked frequently is ‘what happens when my rental contract ends and I want to drop my rent’? Can a new contract be negotiated? Yes, of course.
In preparation, an important factor in the equation is mutual respect.
We want to avoid creating an atmosphere of conflict. We have seen many landlords ‘close down’ during negotiations simply because they have been put in a position where they may ‘lose face’, so it’s important to start the process with respect.
The starting point for the negotiation is the current market rate. This is not what people are paying… it is what properties on the market right now are asking.
You can expect to find a range of prices from unfurnished / un-renovated to recently renovated / newly furnished.
Comparing ‘apples with apples’, you can find a property that closely resembles your current home and take note of the asking price. Bear in mind that the final rental price is likely to be 5 percent – 10 percent lower than the asking price.
Once you have established the market price range, you can inform the owner of the current prices and ask them what they would like to suggest for the new rental agreement.
If the landlord replies with a price, you can then start to evaluate accordingly, remembering that one element is price and another is ‘terms’.
If the landlord asks for your offer, then you can offer the current market price.
As you come to the end of the negotiation, it does pay to remember that a two year term is normal but not mandatory. You can change the length of the lease if you believe that will drop further, or if they will rise.
If you think prices will rise, you can ask for a three year contract instead of two. Likewise, if you believe prices will drop further or you are unsure about your own future, you could ask for a one-year agreement this time around.
You may be in a position of uncertainty, as many people are, with your current job. Its worth noting that the current environment and extra flexibility of landlords has led to the inclusion of a ‘professional clause’ in some contracts.
Namely, this means that should you lose your job and have to leave Macau, you will be allowed to give one months notice without penalty.
Good luck in your negotiation, and if you would like further information or advice, please feel free to contact us by e mail or via the website below.

http://www.JMLProperty.com
info@JMLProperty.com