Rent reduction during construction

[Jonathan Chai]

Hi guys,

I’ve got my first rental property that I’m using for student rental at a local university. It’s currently rented to 4 different students on separate leasing contracts. The house is currently under construction to add 2 bedrooms and a bathroom. During construction, we found a huge leak in the sewage lines (of course, right?!) 

Replacing the sewage lines has blown the budget out of the water and dragged the construction process longer than anticipated. Regardless, I understand that it’s a tough situation for the current tenants. I’ve offered to reduce rents by 15% over the next two months, which they agreed upon a couple weeks ago. Now, one of the tenants is asking for further reduction. 

Curious as to how you experienced landlords would handle this situation? I understand that it’s noisy and frustrating living in a house having work done on it, so I’m not opposed to renegotiating, but I also don’t want to set the precedence for constant renegotiating. Anyone have some thoughts? Thanks in advance!

[Colleen F.]

Are they asking for more because you have exceeded the construction timeline that was given with the original reduction of rent proposal?  If so you should do more.  How many  days was the property not habitable (for example no water or sewage)  Make sure your credit subtracts at least prorate rent for those days.  A good plan would be to tie the reduction amount to the length of the inconvenience.  You don't need to do that for a minor delay but it seems to me you are very delayed. 

Another thing to consider is if this person is more impacted then the others because of how the construction is being done.  Probably not but give it some thought.