Negotiation for renters

The Tenants' Union of NSW chat about negotiation with Julia Murray, an Advocate from the New England and Western Tenants Advice Service. We discuss how to prepare for a negotiation, what to expect and ways renters could go about negotiating with a landlord or real estate agent.

More information:
Tips: negotiating with the landlord: https://www.tenants.org.au/resource/rink
Rent tracker tool: https://www.tenants.org.au/resource/rent-tracker-postcode-tool
Rent increase factsheet: https://www.tenants.org.au/factsheet-04-rent-increases
Rent arrears factsheet: https://www.tenants.org.au/factsheet-05-rent-arrears
Bond factsheet: https://www.tenants.org.au/factsheet-03-bond
NCAT factsheet: https://www.tenants.org.au/factsheet-11-nsw-civil-and-administrative-tribunal

Transcript

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Renting Bytes: Negotiation for renters (Podcast)

Charlie: Welcome to Renting Bytes, a podcast series that breaks down renting into bite-sized pieces. I'm Charlie Wilde. 

Liv: And I'm Liv Nielsen-Gurung. We're from the Tenants' Union of New South Wales recording on unceded Gadigal Country. Today, we're talking about negotiation. How to prepare for it, what to expect, and some ways that you could go about negotiating with your landlord or real estate agent.

Julia: [Soundbite] If you have a sense of what the strengths and weaknesses of your case are, that can help you make a better decision. I think that's where Tenants’ Advice Services are so important; even when you start your negotiations really, really early on, you are going to want to have a sense of what your legal position is.

Charlie: Meet Julia Murray, a tenacious advocate from the New England and Western Tenants' Advice and Advocacy Service.

Julia: [Soundbite] You want to hope that your landlord understands the value of you as a tenant and what a good tenant is worth and that it's understood to them that the amount of rent is not the only metric. 

Charlie: Welcome to the podcast, Julia. 

Julia: Thanks guys. Good to be with you! 

Charlie: Julia, the thought of negotiation can be a little bit scary for some of us. What's something that tenants could do to make it a little bit less intimidating?

Julia: I reckon the, probably the number one tip is to think about it before you do it. Have a plan in your head and think about what you want to achieve and how you want to go about it. And of course things are going to change, but it's really a good idea to sort of plot it out in your head. 

 Charlie: And in a renting context, what might that preparation look like ? 

Julia: So I guess that depends very much on what your issue is, but looking at one of your more common issues, either something like rent arrears or bond. Those are two things that come up quite often. Looking at rent arrears first. If you're in rent arrears and you want to get to a point where you're sorting it out, so repaying the money, you need to have a plan about how you're going to do that and not just how you want to be able to do it, but how you are going to be able to do it. And I think rent arrears a great example where you don't want to be aspirational or overly optimistic about what you can achieve. You want to be realistic and carefully considered in terms of what you're offering to repay. I think one of the worst things you can do is to over-commit and under-deliver, and then end up with a problem. You know, you've lost the trust of your landlord or your agent. In terms of rent arrears you want to be thinking, you know, it's almost like budgeting, but what's what are my in goings and outgoings? What's spare and how will I go about getting back to a point where I'm on track with my rent? If you've got a lump sum, that's fine. But more importantly to say something like, okay, well, this is the amount I can commit each week or each fortnight to get things back on track. That's the sort of preparation you would do in terms of rental arrears is to know what you're able to offer and not to be put in a situation where you're making an agreement to do something that you can't actually achieve. 

Charlie: So how about in bond negotiations? How would a tenant prepare for something like that? 

Julia: You want to think about what you would be prepared to agree to. So have a good look at all of the information that you have about what the landlord's claim is. Nominate the things that you can agree with or things that you could compromise on and have other issues, perhaps that you just, you just won't agree to because they're unreasonable demands. You have to have a sense of what those things are before you go into your negotiations, you want to actually have a picture in your head of what your bottom line would be. And I suppose for some people it's a bit counterintuitive, but, you do want to think about where you want to end up, but not start there. I guess it's a, it's a pretty standard tip for negotiating is not to put your best foot forward straight away. Because invariably there's a bit of give and take in the process, particularly when you're at the Tribunal. You do get to a point where unfortunately, if you lead with your best offer, you'll end up being dragged further than you wanted to go and that can be a problem for people. Rightly or wrongly it's the way that, negotiations in that context progress, where there is a Conciliator or where the Tribunal Member steps into a role of conciliating between the parties. In bond, almost always, you'll get to a point where they'll say, oh, why don't you just split the difference? So wherever you are, you're going to end up going further. So if you lead with your best offer, you can end up paying a bit more. 

Charlie: So you've got to play the game a little bit. 

Julia: It pains me to say that because you know, it ought not to be a game that you're playing, but in some ways the rules of engagement and the way these things work is often that it is a bit of a backwards and forwards sort of dance, you know, and you don't want to be bloody-minded about it, but you just, you do want to be aware that that's how those things often progress. 

Liv: Yeah. And I think that we, like, we negotiate a lot. We negotiate every day in multiple different ways. You know, I negotiate with my eight year old on an hourly basis. But, I think that negotiating with a landlord or with a property manager, you're negotiating about your home, where you live with your family, I think it can be a really different type of negotiation. Do you think that's true, Julia, or do you think that there is a power imbalance? Like there's an obvious power imbalance, right?

Julia: I do think that there is a power imbalance. Absolutely. Oh, I guess the other tip that I would would say as a foundational issue is you want to know your, your legal position before you go into those negotiations. I mean, rent arrears is quite straightforward. You owe the money, you need to figure out a way to pay it back. But bond and uh, rent increases and other things can actually be given appropriate context by understanding what your likely position is legally. So that if it did kick on to a formal decision being made in the Tribunal, what would be the likely outcome, and nobody can know for sure what the outcome is, but if you have a sense of what the strengths and weaknesses of your case are then that can help you to make a better decision. I think that's where Tenants' Advice Services are so important because, day in day out, we do negotiate with landlords and real estate agents. We do appear in the Tribunal. And even when you start your negotiations really, really early on, you are going to want to have a sense of what your legal position is. Not because you want it to go full course, but because that informs the way that you conduct yourself, do you come out all guns blazing? Do you take the softly softly approach? You know, you really want to have a sense of where you are before you start. And people often call us and say, look, I haven't had any conversations with my agent or with my landlord, I wanted to talk to you first and that's great. That's excellent when people make that decision to, to try and get a sense of the lay of the land before they actually get into the process of negotiating, because all of those things help you to make better decisions. 

Liv: I think that if you're negotiating at the beginning of a tenancy or during a tenancy or something like bond, the tenancy has already ended. So I think there's different approaches to negotiations depending on where you're at. And, you know, thinking about that power imbalance. Well thinking about whether or not there could be some sort of retaliatory action on behalf of the real estate agent or the landlord. I think those are things that tenants are really concerned about. Would you agree with that, Julia? 

Julia: Yeah. I advised someone recently and they were in the fortunate position of not being worried about whether they stayed or not in the property. They were talking about a proposal for a new lease and a, a rent increase that the landlord was proposing. And I went through the pros and cons of being in a fixed term agreement and you know, what it meant and the thing that we have to say to everybody every time is if you're in a fixed term agreement, you're nearing the end of your fixed term agreement, and you're at risk of receiving an end of fixed term notice of termination. If you're outside of a fixed term agreement, you're already at risk of receiving a no grounds notice. And that has to be , that has to be born in mind when you're, when you're negotiating every interaction you have with your agent or your landlord could spell the end of your tenancy. I mean, that's the, that's the legal reality and it's a terrifying and dismaying prospect for a lot of people when you explain that to them, but you do have to factor it into your calculations. You know, it's always evident when somebody doesn't mind, whether they, you know, when they say, well, I'm not really attached to this place, I'm not even sure whether I'm going to want to stay for the next six months or whether I want to commit to a, an agreement. That's the ideal position for a tenant to be in, because then I can negotiate freely. They don't have to tiptoe around. They can actually freely negotiate and, you know, worst case scenario, they're given a notice that allows them the option to leave. But for so many other people, they're in the opposite situation where they absolutely do not want to move. It's going to cost them a bomb financially. It's going to cost them emotionally. You know, the market's a pretty hostile place, statewide at the moment. Those are all factors that need to go into the mix.

Julia: And so, yeah, that power imbalance is a massive issue for every tenant, unless they're in the luxurious position of, of not being attached to where they live. I think that's, that's a dynamic that we just cannot afford to ignore. Nobody can because it's all very well to say, well, this is, this is what you can do. This is, this is your prospects. Uh, without mentioning the elephant in the room, which is any decision you make could result in your tenancy being ended, um, quite legally. 

Charlie: Absolutely. 

Liv: That's why we need to get rid of no grounds termination notices. 

Julia: Well, absolutely. I mean, you know, there's, there's no doubt 

Liv: That's a different podcast.

Julia: It is. It is. Call me! 

Charlie: Yeah. We do appreciate you bringing up about the risks, Julia, because it's not a negotiation that you're just entering into with nothing at stake. There are potentially damaging things that could happen. But if after considering those risks, a tenant decides, okay, well, no, I'm going to go ahead. I'm going to have a negotiation with my landlord. Let's say in this case over a rental increase, what would you advise a tenant to do in that situation? Like where could they start? 

Julia: I think what's helpful to do at that point is to say, okay, what's my position on this? What, what do I want to achieve out of it? As, as I said earlier, you, you want to be clear about where you want it to go, why you're raising it, and how you might go about it. And it's always super useful to think about it from the other person's side. So what do I want, what do I think they want and how can I craft my approach on the basis of me being able to achieve as much of what I want as possible. But also the person on the other side, what do I think they want? What do I think they would accept? So rent increases is a great example and there's some compelling resources on the Tenants' New South Wales website in this particular case, which is, a sample letter to suggest a compromise. It's a really good example. The landlord can get some of what they want and the tenant can get some of what they want by suggesting a different amount to what the landlord's proposed. So if they're proposing 50 bucks a week, increase, what about offering 20 or something along those lines. Saying to the landlord, please don't increase the rent might work, but saying to the landlord, you know, this is how it impacts me. I enjoy living here. I'm a good tenant. Would you consider this lesser amount? So you still get something and I still am able to afford to live here. And you know, if, if you landlord is a reasonable human, and we like to think that a lot of landlords are reasonable humans, then there should be some common ground there that you can resolve the issue, without it turning into some kind of bun fight. And that particular resource is a great example of how you would start the process, how you would reach out to the landlord and say, I I'm hearing that you want to increase. This is what it means for me. And this is what I'm suggesting instead of what you've proposed. As I understand it, anecdotally, that can be quite a successful approach and it can avoid all of the heartache and hardship of going through a more formal legal process. And again, with rent increase, it's a horrible process for a tenant to, to actually pursue an order for an excessive rent increase at the tribunal. And it's absolutely not to be recommended. So you want to start a dialogue with your landlord to try and find a better solution for you and for them. And without having to rely on the legal protections, which are minimal at best. 

Charlie: Right. And there are also some really great tools on tenants.org.au. The rent tracker tool for one can help tenants find comparative rental prices. And sometimes that can lend weight to an argument that, hey, maybe this rental increase isn't in line with the market rate.

Julia: Yeah. All of those. Research generally is always helpful in a negotiation. And yeah. Again, assuming that your landlord is a reasonable human, that should carry some weight. It doesn't always, but it should. 

Liv: So we've talked about a lot about process and the risks and getting prepared. But from what I understand for some tenants it's really, really stressful to talk to their, to their landlord or real estate agent. Are there any practical suggestions that you could give a tenant who might be feeling just flat out anxious about negotiating, like even making that call to a property manager?

Julia: Well, I think you probably want to want to just concentrate on... You know, I was going to say, what's the worst thing that can happen. Unfortunately, the worst thing that can happen is you should, you could receive termination. Let's not, let's not start there. I suppose again, I would say, let's assume that your landlord is a reasonable human and you've got the other variability of the, of the agent who may or may not be a reasonable human. Ultimately it ought to be the landlord who makes any decision in relation to the tenancy. I always say to people, if you make your tone friendly and respectful, you would be very unlucky to be disadvantaged by asking a question. If you're nervous, I think doing it in writing is almost always going to be your go to, because you've got the time to consider it and craft it and look at it and get someone else to read it and say, does this time sound all right to you? Because tone is important. Um, the words are obviously important, but I do think putting it in writing is probably a good way to give yourself the space and the distance to actually feel like you're saying the right thing in the right way. But again, in whatever way that you do it, I think you want to think about how you're going to do it before you do it, sort of rehearse it in your head where he could do a role play with someone if you wanted to, but you know, try and prepare as best you can so that you can think about how it, how you think it might go, what you want to achieve out of it, and then make that approach and try and do it in as polite and respectful a way as possible, but without being a doormat. You have to try and walk that balance. Uh, I know it sounds ridiculous. And of course there are situations where it doesn't really matter if you've got a certain type of personality that you're dealing with. You're probably not being paranoid. It's going to be difficult to have those conversations with a person who is not minded to have them, and it's not reasonable in the way that they deal with you. So that's really tough. No one has a magic wand around that, but I suppose, you find a way, if there's someone at the agency that is it easier to deal with, then you would go for that person, you know, you would try and pick your mark if you've got the choice. Some people even have the luxury of being able to deal with the landlord directly, even if there is a real estate agent involved. If you're assuming that your agent is a little less reasonable and your landlord more than you might have the capacity to make an approach to them if they're okay with it. People so often say, am I allowed to contact my landlord directly? Yes. You are allowed to contact your landlord directly and provided that your approach is respectful and is reasonable , there's no reason why they would object to you doing that. 

Charlie: Julia, you mentioned that it could be useful for someone with anxiety to approach their landlord or real estate agent in writing. Would there be any circumstances in which it would be preferable to make that first approach in person or over the phone?

Julia: Look, it's really a judgment call . If you felt confident. Yeah. It, it depends on, on how your anxiety manifests. To me, it seems logical that you can prepare better if you do do it in writing. But certainly if you concerned about the formality creating a further problem or the perception of formality because you put it in writing, creating a further problem, then that might be a time to definitely make a phone call. If you feel confident to make a phone call and you want to start in that way, I would be very encouraging of doing that. Whatever feels right for you. I certainly wouldn't say, that it's automatically going to be less stressful to write, particularly if you're not strong on writing and you might be worried that you're, you can't find the words in writing to, to express yourself or to do what you want to do. So horses for courses. I would say I chatting to somebody else getting advice again. Uh, an experienced advocate can probably suggest the best way, but at some point you yourself have to make a decision. How do I want to approach this? How would I feel most comfortable approaching this? 

Charlie: So, what if you start a conversation with your real estate agent and they are dismissive, or start looking at their phone as they might do. How would you advise a tenant to handle that situation? 

Julia: I suppose all you can do in any interaction you have with anyone, whether it's in a tenancy context or otherwise is to try and reach them. Any kind of escalation is not going to be helpful, but it's completely understandable that you would, at some point get annoyed or frustrated, you know, take a deep breath, try and say something to make them understand where you're coming from. So to, to explain that it's really important to you. That you'd be able to discuss it with them, that you'd appreciate them asking the landlord a certain question or something even like, yeah, I really enjoy living here , but this thing is a big issue for me and I'd really like the opportunity to resolve it. I guess in any of those sort of situations you've just got to try and find a way to be productive in the way that you're communicating. Look, there's, there's no easy answer to a situation where you're not being respected or heard by your agent or your landlord. I mean, that's difficult for any of us in, in any kind of situation, whether it's where we live or where we work or, or who we're dealing with in our day-to-day lives. These are tricky, tricky things. Uh, but I suppose you're unlikely to achieve better results by getting annoyed or angry and expressing your frustration to that person. I mean, have a good scream once you've finished the convo, and you're not there anymore, but try and bite your tongue, maybe even see it as a challenge to find a way to not bite when that person is responding in that way and try and find a way past it. But yeah, there's no easy answer to dealing with difficult people. I think you just have to try your best to see where they might be coming from. Maybe even ask questions, you know, ask them a question about, oh, what is the resistance point to this? How are you going to plot a course through? So for you to be able to offer the landlord or the agent, something that they want, you need to know what it is. You want to explore the reason that they're resistant and you want to try and get an answer from them that they can give you something to work with. 

Liv: I agree that you need to find some sort of common ground with the person that you're negotiating with. 

Julia: Yeah. I think in most circumstances you want to hope that your landlord understands the value of you as a tenant and what a good tenant is worth. And you hope that that underpins any sort of negotiation that you're going to have and that it's understood to them that the amount of rent is not the only metric, the only value that they get from you as a tenant, they don't just get your rent. They get your care of the property. They get the rent on time, they get your reliability, they get your value as a tenant. And look, it's not across the board that a landlord understands that. But if we assume that our landlord is a reasonable human, we hope that they are receptive to that message and that you should back yourself as a tenant, to say, look I'm asking for this, but I'm a good tenant. You get something from me. I want to get something from you. I want to have a productive relationship with you. And then yes, it's important to be clear about what you offer, not just what they want.

Charlie: On that subject of being clear, say I talk to my real estate agent, they make an agreement. What's some advice that you've got for me around that, if I say, make that agreement over the phone?

Julia: Well, any time you're having a verbal interaction in relation to something and agreement is made, we always suggest that you follow that up. So the way to deal with the lack of evidence, so to speak of an agreement that's made verbally is to follow it up with an email saying, just confirming our conversation this afternoon. Thank you for agreeing to this arrangement, because then it's in writing and if they don't write back and say, oh, no, that didn't happen then you've got it on record and you can fall back on that if some sort of dispute arises later. I guess also making sure that everybody understands the same thing that the parties are on the same page with any agreement, because, for whatever reason, we all interpret things in certain ways. And something someone says might seem very clear to one of the parties and very clear to the other of the parties, but they may be different things. There's room for interpretation, around a lot of things. So it's important to make sure that you are clear and transparent, whatever form your communication takes. And that's usually by putting it in writing after a conversation. 

Liv: All right. So say the tenant has done everything right. They've done their research, sought advice, applied some of the tips that we've talked about, but they still weren't able to come to an agreement with their landlord. Was it all a waste of time? 

Julia: Well, no. I mean, look, you may not get what you set out to achieve, but it's definitely worth having a crack. And if you do it in a reasonable and respectful way, there ought to be no harm to the relationship with your landlord or your agent. You know, the alternative is to not do anything. And if it's, if it's the case that it's a significant repair issue, that's having an impact on your daily life, well, that's not sustainable. Ditto with a rent increase, ditto with a bond claim, you know, You need to, find a way to be able to address issues and it's not comfortable for everyone, but, I do think that it's, it's definitely worth doing, because if you don't at least have a crack at it, then you certainly won't achieve anything. So, chalk it up to experience. If you don't get what you hope to achieve and move on. 

Charlie: That's good advice again, Julia. Thanks for coming along and sharing all this information with us. I feel like I've learnt a lot.

Liv: Yeah, it was a lot! Honestly, seriously, I learnt stuff, I'm not joking!

Charlie: Absolutely. What were your takeaways from our chat Liv? 

Liv: Um, I think that negotiating is tricky. It's a good idea to plan and prepare, getting a sense of the strength and weakness of your position, maybe by doing research or getting advice. By getting a lay of the land you can be clear about where you want the negotiation to end up, and you can have an idea of what they might want.

Charlie: Hmm, and give and take is involved.

Liv: Yeah. With a willingness to compromise it is more likely to succeed. It's always a good idea to be polite and respectful and communicate in a way that is comfortable for you. 

Charlie: And Tenants' Advice and Advocacy Services are always there to help if you need it.

Julia: Cheers!

Liv: Thanks Julia!

Julia: Thanks for the opportunity to chat.