One of the big stories of 2022 has been inflation. Towards the end of 2021, inflation was going up. Thanksgiving famously had families shelling out huge sums of money for turkeys. In 2022, the Federal Reserve had plans to stem the tide of inflation by raising interest rates. However, Russia’s invasion of Ukraine took inflation out of anyone’s control, and now we are seeing the highest rate of inflation in decades.
Of course, economic movement hits those earning low incomes the hardest. The rising cost of gas, food, and just about all other consumer goods has made it difficult for many people to make ends meet. The good news is that while inflation has impacted consumables, it hasn’t yet had an impact on the costs most renters are paying for housing.
But this is bound to change over time. The cost of rent, as well as related expenses like renters insurance, have stayed stable so far in 2022. Is there any chance that this will last? If not, how will high inflation impact renting for people earning low incomes?
Why has rent stayed stable?
Inflation has an impact on the cost of everything over time. However, that impact is far more immediate on some things than others. Let’s look at the most recent contributor to high inflation. The US ban on Russian energy has made gas prices shoot up. When the price of gas increases, the price of all other consumer goods – which need to be transported and stored – goes up.
This is fairly immediate, with shoppers seeing changes over the course of days rather than weeks. The goods themselves cost more to get onto the shelves, and are therefore priced accordingly.
Rent is different. The price of rent is far less based in material reality. Rather, it has to do with a combination of the expenses of the landlord, their expected income, and what they think renters will pay. The cost of providing the rental space does not go up due to rising gas prices.
However, this is unfortunately a temporary reality. Here’s why.
Landlords’ expenses rise
Your landlord’s expenses rising does not have to impact you, in theory. It doesn’t necessarily mean that they are spending more money ensuring you are taken care of. But it does mean that the income they earn, both from you and other sources, no longer goes as far. They may struggle to make ends meet on the same income they earned before.
This gives them incentive to raise the price of rent. They need extra money in order to keep themselves above water. However, they cannot immediately increase your rent if you have a lease of a year or more. When they do raise your rent, they have to abide by any prior agreements with you as well as government regulations.
This means that people renewing their leases now might face big increases, as will people trying to rent for the first time. People who still have months or years left on their leases will avoid increases for now. If inflation goes down by the time the lease comes up for renewal, the landlord may no longer need or want to increase the cost of rent.
What can you do?
Unfortunately, there is little that we can do as individuals to control the actions of landlords. You can speak to your landlord about affordability if they try to raise the rent. The simple reality is that if you can’t afford to pay what they ask, they may have no choice but to accept that. Finding another tenant and losing a few months’ worth of the current rent will do them much more harm than good.
Rent control regulations differ according to state, and you can and should look up your state’s specific laws. Knowledge is power in any negotiations you have with your landlord. Some landlords do not have your best interests at heart and will try to take advantage of people who are not familiar with the regulations.
Hopefully, inflation normalizes within the next few weeks. For now, we will have to deal with rising prices and do our best to keep landlords honest.