Image: Gunnar Lindebo
The economic and social impact of Covid-19, isolation and lockdown necessitate that many people may need to make special arrangements with their landlords to adjust personal or commercial lease agreements for the next few months.
Most people are feeling very nervous about having that conversation and the uncertainty about the future doesn't make it any easier.
Here are 7 points to keep in mind to help you prepare for the conversation:
1. Have the conversation sooner rather than later.
People are generally much more inclined to negotiate if they feel that they have been acknowledged and kept in the loop. The problem won't go away or resolve itself if you ignore it or keep quiet and hope for the best.
2. Negotiate with integrity and honesty.
It is very uncomfortable to discuss your financial distress and divulge your financial position to someone else. However, in this case it is better to play open cards and be honest about how dire, or not, your situation is. Being honest should not put you at a disadvantage (unless you have an unscrupulous landlord) but it goes a long way in establishing trust and maintaining good relationships and credibility.
3. Special arrangements will be the norm not the exception
If you are renting anywhere in 188 countries your landlord is aware of the context and the impact of Covid-19, isolation and lockdown on the economy. He (or she) might be willing to take his chances with a new tenant who might be able to pay the full rent but this is an unknown that seems to be more and more unlikely as the reality of the economic fallout starts to bite. Chances are that she would prefer to keep you as tenant because you have a history, an existing relationship and it will save time and money because no advertising and vetting are necessary.
This is part of your negotiating power. Both of you stand to gain if you can come to an arrangement, if you can't, there might be various other properties for you to look at, at a reduced rent with a reasonable landlord.
4. Present multiple options for the new arrangement
Preparation is key. Sit down and work out exactly how much you can afford. What are the variables? What is the worst case scenario? What is the best case scenario? What is the percentage reduction you are asking for and for how long? Is there something you can offer instead of money that you can barter with?
Have at least two but preferably three options that you could put on the table to discuss. It is also a good idea to put yourself in your landlord's shoes and think which options would most acceptable to you as landlord.
5. Be clear on timelines and the circumstances under which these would need to be reviewed.
You want an arrangement that will alleviate stress not create more, so make sure that you give yourself enough leeway. It is highly unlikely that your circumstances will change in one month's time and you don't want to have this conversation every thirty days. Negotiate an arrangement that will be in place for at least three and preferably six to nine months.
You can have a clause that states under which circumstances you will review and timelines for when you will review.
You can include a sliding scale for payments as well. For example: The first 3 months the rent might be reduced by 50%, if your income improves the rent might increase to 60% from month 4 and so on.
6. The new arrangement must be in writing
Having a written signed agreement is non-negotiable. It protects you and your landlord and it stipulates very clearly what rules and regulations govern the new arrangement. You can have the new arrangement as an addendum to your current lease agreement or contract or it can be a new agreement to be signed by all parties.
7. Assume benign intent.
Sometimes when we feel nervous about a difficult conversation we need to have, our internal dialogue starts to veer to the negative and we inadvertently make assumptions about what we think the other person's response would be.
The truth is, we don't know what is really going on in someone else's head or heart. We guess. From our historical relationship we might be able to make a more educated guess about what their stance would be and prepare for that, but this might also be the one time that they really surprise you with their understanding and willingness to find a joint solution.
Good luck with your conversation. If you need any help with preparation or if you would like to get more clarity on option generation you are welcome to contact me.