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If you've become stretched financially you may be considering approaching your landlord for rent reduction. The good news is, it's well within your rights to request a reduction. This guide will take you through what you need to know about rent reduction agreements and some templates you can use to get it ready.
What's in this guide?
- What is a rent reduction agreement?
- When should I use a rent reduction agreement?
- Rent reduction agreement vs rent reduction letter
- What does a rent reduction agreement include?
- How effective is a rent reduction agreement?
- Do I need a lawyer to prepare a rent reduction agreement?
- Get access to customisable rent reduction templates online
- How do I organise a rent reduction?
- How do I write a rent reduction agreement template?
- Where to get free legal documents and templates like a rent reduction agreement
What is a rent reduction agreement?
This is a legally binding document entered into by the tenant and landlord in which the landlord agrees to reduce rent on a property for a period of time. Before using this template, the tenant and landlord will have already had a conversation and negotiation about the reduction of rent.
When should I use a rent reduction agreement?
If you're finding it difficult to pay your rent, you should reach out to your landlord to negotiate a possible rent reduction. Those affected financially by the COVID-19 epidemic can also consider asking for a rent reduction. Keep in mind the rent reduction is only temporary, so it's not suitable for those that need a permanent reduction in rent.
When reaching out to your landlord, be polite as possible. The process may be intimidating but it is really in both your interests. A lower rent will make it easier for you to cope and it will help your landlord avoid a vacancy. Keep in mind that while you can ask for a reduction, you can't dictate the rent you'll pay.
Rent reduction agreement vs rent reduction letter
The two sound similar but are different. A rent reduction letter is given before the rent reduction agreement and is the first step of negotiations toward rent reduction. It's written by a tenant to notify the landlord that they would like to discuss a rent reduction. It is not an agreement and has no legal backing. Even if a landlord issues a response agreeing to discuss a reduction, that does not constitute a binding agreement.
A rent reduction agreement is binding. It is proof that a landlord and tenant willfully negotiated and agreed upon new rent terms.
What does a rent reduction agreement include?
Your rent reduction agreement will include the following:
- Names of both the landlord and tenant
- The address of the property
- The rent the tenant paid before
- The new rent the tenant will be paying
- The period within which the new rent is payable
How effective is a rent reduction agreement?
A rent reduction agreement is proof that you and your landlord agreed on new terms for rent. It also protects you from liability, because you will not be paying the rent on your original tenancy agreement.
Normally, failing to pay this initially-agreed on rent constitutes a breach of this agreement. With a rent reduction agreement, you and your landlord set new rent terms that are valid within a predetermined period. That means you cannot be held liable for breaching the original tenancy lease during the new rent period.
Do I need a lawyer to prepare a rent reduction agreement?
No, you do not need a lawyer to prepare this document. Both you and your landlord have the right to enter into a contract freely for the purpose of conducting legal business. You can approach your landlord directly and indicate your intentions to discuss a possible rent reduction. If you two meet and agree, you can prepare an agreement that outlines the new terms.
You can use a rent reduction template and customise it as needed. We've listed some useful templates at the end of this guide.
Get access to customisable rent reduction templates online
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How do I organise a rent reduction?
You first need to contact your landlord and make known your intent to discuss a rent reduction. Prepare a rent reduction letter addressing it to your landlord. In a polite way, inform him or her of how your financial situation has changed. Attach supporting evidence such as a recent pay slip or business information clearly showing a reduction in your income.
Finally, ask him or her to reduce your rent temporarily to an affordable amount. This is the amount you are comfortable paying considering your current income and expenses plus savings and government assistance you might qualify for.
On the day you meet your landlord, you'll need to put forward your case for a reduction. While negotiating, bear in mind that the landlord too may be facing difficulties, especially during the pandemic. If you can both agree on a lower rent, you can use a rent reduction agreement to formalise it.
How do I write a rent reduction agreement template?
Once you and your landlord have agreed on a rent reduction, you can write the template:
- Fill in your details as well as those of the landlord
- Identify the property
- State the previous rent amount
- State the new rent amount
- Establish a time period within which the new rent is valid
- Sign it and have the landlord sign it.
After writing the agreement, register it with your state's Consumer Affairs office. This will qualify you for additional assistance such as the national rent relief grant. It will also qualify the landlord for a land tax relief grant. You can register online.
Where to get free legal documents and templates like a rent reduction agreement
You can use these sources to get free rent reduction agreements:
- Consumer Affairs Victoria. Consumer Affairs Victoria is helping tenants by offering free rent reduction agreement templates online. You can download one from its website and tailor it for your use.
- Lawpath. Lawpath is an online legal resource empowering businesses with free legal documents for a monthly fee. Sign up and get your first document free.
- Tenants Union of New South Wales. This organization has a page with free legal document templates relating to tenancy including a rent relief agreement and a letter to initiate rent reduction negotiations.
- Government of South Australia, Department of Treasury and Finance. This government department has made available online a free rent reduction template. It is easy to understand and customize for your own use.
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