If a tenant requests a rent reduction or abatement, you need to handle the matter carefully. The tenant may be struggling financially, or other rentals nearby are priced lower. How will you handle the situation? This blog covers basic information about rent reductions and abatements and how to respond to your tenant’s request.
What Is a Rent Reduction or Abatement?
Rent reduction is when your tenant requests to reduce the amount of rent due before their lease is up. This could be temporary or permanent depending on the tenant’s situation. They may request a rent reduction because they are struggling financially, or maybe because there’s a recession. If the tenant finds cheaper rentals in the area, they could put in a rent reduction request to match the cheaper rentals. In this case, the reduction would be a permanent change to the cost of the rent.
Rent abatement is when your tenant requests to have a rent-free period. When starting a lease, there is a rent-free period to allow the tenant to move in without being rushed. However, rent abatement happens due to the property being uninhabitable. Property damage from natural disasters, fires, flooding, and other damage makes a property uninhabitable for tenants.
Rent reduction and rent abatement periods are decided between the tenant and landlord. Depending on the situation, these periods may last weeks or months.
How to Respond to Tenants
As a landlord, do not overreact to the tenant’s request. Most likely, the tenant is already stressed from other difficulties in their life. Here are the steps you should take when a tenant puts in a request for a rent reduction or abatement:
- Be proactive- Whether there is one request or a handful, you need a system in place to deal with the tenant’s rent requests. Ask the tenant to put their rent reduction or abatement request in writing. Review the request and confirm you have received it. Doing so reduces communication issues and leads to a better solution when you understand the tenant’s request.
- Be flexible for tenants- Being understanding and flexible with your tenants helps ease some of their stress. When dealing with a tenant’s rent reduction or abatement request, remain calm and level-headed.
- Handle each request on a case-by-case basis- All tenant requests cannot be handled with the same solution in most cases. Any relief should be determined by you and the tenant. Before agreeing to a request, you should seek legal advice to determine the best course of action. It is important when dealing with rent deferment requests and changing or extending lease terms.
- Tenants should provide proof of need- Whether financial stress or competitive rent, proof should be provided. When you must come to an agreement with the tenant about how much relief is being provided, the tenant should also sign some form of documentation that you have granted their request.
When handling a tenant’s request for a rent reduction or abatement, how you respond affects the relationship with your tenant. Do not overreact and remain calm during the process and be sure to create a paper trail. If you need help managing your properties, STRATAFOLIO is here to make it easier. Schedule a 1:1 demo today.