Understanding the Difference Between Permanent and Temporary Rent Reductions

San Francisco has some of the highest rents in the country. However, this has been somewhat tempered during the Covid-19 pandemic, which has opened up the possibilities for landlords and tenants to work out payment plans or otherwise just lowering the rent. In a city like San Francisco that has rent control for some tenants, it’s wise to get a handle on the difference between temporary rent reductions and permanent ones.

Negotiating a Rent Reduction

The pandemic has provided many tenants with an opportunity to change the terms of their rental agreement. Sometimes they have successfully worked with their landlord to terminate their lease early because they want to move to a more affordable neighborhood, or they want to leave the Bay Area entirely. And other times it’s an negotiation for a reduction in rent. Then the issue is making the distinction when the reduction should be a permanent one or is temporary.

Temporary Rent Reduction Agreements

For rent-controlled units, the San Francisco Rent Board regards temporary rent reductions permissible if the rent is reduced because of a legitimate financial hardship that is specific to that tenant’s personal or specific housing situation. For instance, you approach your landlord and tell them that you’re having difficulty meeting your rent because you were laid off or your work hours were reduced because of Covid. Maybe you’ve experienced unexpected expenses due to having to care for your sick relative.  They agree to lower your rent, so that you can actually pay it. In these cases, you should have a written record that details the economic hardship, the amount of the reduction, the reason that the reduction is being granted, and the length of time for the reduction.

Permanent Rent Reductions

Under the SF Rent Board, a rent reduction is permanent and can’t be rescinded or cancelled if the rent reduction is made because of the market conditions. For example, if your landlord authorizes a rent reduction based on the presence of a vacant comparable next-door unit that is being offered at a lower rate than your apartment, then this rent reduction is permanent. Why? Because it’s based on market conditions and not on any personal need or economic hardship that you’ve suffered. This means that any future rent increases must be based off of the new lower rent amount, which now becomes the new base rent. In these cases, the property owner is probably not permitted to cancel or withdraw the reduction further down the line.

Rebates and Incentives

Sometimes property owners will offer you a month free, gift certificates, vouchers or other gimmicks to prevent tenants from leaving so that they don’t have to fill up a vacancy. If the landlord has the tenant sign a lease with a higher rent than what the market would warrant just to persuade them to sign the lease, the rebate wouldn’t be temporary. This is because it was given due to a soft rental market and not because of the tenant’s specific situation. The rebates or incentives are treated in the same way as the straight-forward rent reduction.

Discuss Rent Reductions with a Tenants’ Rights Attorney

It can be difficult to ascertain whether a rent reduction is based on your economic troubles or market conditions. That’s why it’s crucial to put everything in writing to know where you stand. If you have rent reduction questions or other issues with your landlord, then talk to a Wolford Wayne tenants’ rights attorney who can guide you through this complex subject area. Contact us to get started.