SHOULD YOU SIGN A 1 or A 2 YEAR LEASE
THERE ARE UPSIDES TO BOTH OPTIONS.
By Annie Hawkins of Sovereign Associates, Inc.
If you are looking for an apartment or to renew your lease, you may wonder if a 1 or 2-year lease works better for you, if your landlord is offering those options. One consideration is where you think rents will be in a year. Everyone has an opinion about where the market will be in a year; your choice should be based on your research of the rental market and your gut feeling about what's next for you.
If you take a 2-year lease, you are locking in the rent you pay and protecting yourself from a rent increase during that term. This could be a good hedge against rent increases if they appear to be increasing monthly.
Are you concerned about your circumstances changing or want the flexibility of testing out a neighborhood before committing to it? Then a 1-year lease may work better for you. A change in the market could make rents go down a bit, and you may find an apartment you like that has a lower rent than you have been paying.
The main perk of signing a 2-year lease is avoiding a rent increase in the second year. However, be aware that some landlords offer 2-year leases with a slight increase in year two. Remember, a year goes by extremely fast, and you could find yourself scrambling to find a new place, pack up, and move if you haven't built in a plan for moving again at the end of a 1-year lease.
Another option to explore is a 2-year lease with an "opt-out clause." If you can negotiate this option with your landlord, the written agreement's terms may allow you to leave your 2-year lease before it ends. This could let you off the hook should unforeseeable circumstances occur, such as getting laid off or you will be closing on your purchased apartment before the end of your rental lease.
Here's an additional option to be aware of: if you are signing a lease during the colder months, some landlords want you to sign a 15-, 16-, or 18-month lease so that the renewal comes up in the busier months of May to August.
Whichever choice you make, the best outcome hinges on good communication between you and your landlord. Have everything agreed upon in writing and read through your lease thoroughly so that you are clear on all the fine print. Knowing you completely understand the details gives you the confidence that you are making the right decision.
