How to negotiate the rental price of a house

It is important to be informed beforehand, for example with BBVA Valora, on what the neighborhood is like or the price of similar properties
More and more people are choosing to rent a home before buying one. And with the current job uncertainty – along with a decrease in the purchasing level across almost the whole of Spain – it means that getting a mortgage loan can be risky. Not to mention young people, who are increasingly choosing a life with fewer ties and having a fixed and stable home is no longer one of their priorities. However, now that renting is becoming more popular, it also means that the demand exceeds the offer, with the risk of causing an increase in price. This is why it is important to know how to negotiate the rental price of a house.
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Another reason people prefer to rent instead of buy is that they pay a fixed amount every month. This is not the case for people with mixed or variable mortgages, as their monthly mortgage repayments are subject to fluctuations in the Euribor. However, because rental is a fixed monthly payment, it is important to negotiate with the owner of the property a price that you can afford. Even though a large part of negotiating will rest on our power to convince and on the limits that the landlord imposes, there are some tricks that can help us.

30% rule to calculate the apartment you can afford to rent

In order to negotiate the rental price of a home with the owner, the first thing to take into account is your purchasing power. That is, how much can you pay a month for a property and still cover other needs, both basic such as food, as well as minor needs. To ensure that the monthly rental price you pay meets these requirements and doesn't exceed your budget, experts recommend following the 30% rule.

What is this rule? Well, it is as simple as setting the limit of what you will have to pay every month for the property at 30% of your monthly income. This way, you will still have a monthly margin to cover everyday expenses as well as any unexpected events that may arise. According to this rule, a family unit that has a monthly income of €3,000 should look for apartments to rent with a value that is about €900, or failing that negotiate with the owner.

However, it can always be a bit flexible and negotiate a higher price, for example an amount that reaches 40% of your monthly income, but only if we get advantages in return. For example, if the apartment that the family wants to rent with €3,000 of income costs €1,000 a month, but it has very good public transport links to work, those €100 over the experts' recommendation will be offset with the savings in gas. Another scenario would be finding an apartment at €1,200 a month (40% if we earn €3,000), but that, as well as public transport links, it includes sports facilities and/or a swimming pool in the same building. This way, the money above what was negotiated would be compensated by the savings in gas and by the monthly gym fee.

So, if you have the 30% rule as a guide and the additional expenses which we do not want or cannot give up, it will be easier to negotiate the rental price of the home around this figure. Firstly, because when we know our real payment options, we will now be seeing properties that, more or less, fit our purchasing power. And, secondly, because going into a negotiation with some previous calculations will give us confidence and the ability to be stronger and more convincing in the negotiation.

Find out the costs of a rental contract

In keeping with getting informed in order to negotiate the rental price on the basis of hard facts, the aim is to get a result that matches our ideal home. This means that it is important to find out all the costs that are associated to signing a rental contract.

Renting offers more flexibility than buying but, obviously, less savings. However, the reality is that when renting you also have to pay an initial cash amount a lot higher than what you will be paying each month. This figure includes different aspects, some of which can be negotiated with the owner of the property to lower the costs. These include:

  • The first month's rent: is the first payment of the rent. Here the negotiation should be done beforehand to establish how much will be paid each month.
  • The deposit and additional guarantees: the law states that before entering to live in a rental property you need to pay a deposit equivalent to a month's rent. However, the payment of some additional guarantees is not compulsory, which is where you can negotiate. We can prove our financial solvency or, if we have already rented before, we can request our former landlord to write us a letter guaranteeing our good behavior as tenants, something similar to letters of recommendations at work. With this we can convince the landlord that is it not necessary to pay additional guarantees or insurance to those already required by law.
  • Non-individualized costs: the law also states that the costs that are a direct result of using the property, such as water or electricity, must be paid by the tenant. However, costs that are non-individualized, such as community fees or waste tax, will not have to be paid by the tenant. If in the negotiation we manage to get the property owner to pay for these costs, we will save a significant amount.
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Use BBVA Valora to find out the approximate price of the house you want to rent

BBVA Valora is a tool available on bbva.es which helps you to find out the estimated current rental price of the house you want, as well as its price variation over the last four years. This estimate analyzes the property using its land registry information and the advertised offers for similar properties nearby.

This means that if you use BBVA Valora before you negotiate with the landlord, you will be able to get an idea of the rental price of the property and negotiate the monthly rent with verified and solid data.

Furthermore, you have access to interesting tools like Buy or Rent, which you can use to find out what expenses come with buying or renting a property. This way you will have more information to help you decide which is the best option for you.

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