The Rental Housing Market Today: Heroes and Conditions

We decided to find out what has changed in the rental housing market and how all its participants interact today: what is prioritized by tenants and for what they are willing to pay extra, what conditions landlords set, and why they have started investing in good renovations. Also, comments from a realtor, designers, and a representative of the online rental service The Locals.

What the Realtor Says

Mikhail Temitsky, expert, manager of the Golden Tree real estate agency

Wishes and Fears

Despite the name "real estate market," it still moves and changes.

More investors are appearing who actually run rental businesses, understand the necessity of modern and quality housing, and grasp tenant needs (in residential property - tenants, in commercial property - lessees, note by Mikhail). Property owners increasingly ask themselves: "What apartment would I want to rent for myself?" And honestly answering this question, they renovate, furnish the apartment with modern furniture and appliances.

Nevertheless, remnants of past thinking are still strong among all market participants: property owners still think they will find good tenants in an apartment that hasn't seen a renovation for decades, agents still exist in the paradigm "our mission is commission," and tenants are swayed by beautiful photos with low prices and often become victims of fraud or clandestine conditions.

Fears have not changed in recent years. Simply, each has their own "bag of concerns."

Property owners are still afraid that tax authorities will find out about their undeclared income, and tenants "will ruin" the apartment. Unprofessional agents fear that they will be "dumped" - not paid their commission, and targeted online communities will take over their function. And apartment renters fear fraudsters who will steal their money and, consequently, their housing.

Apartment for rent, design: INT2architecture

About the Internet and the Role of the Realtor

Open databases and social media make property owners more accessible. It's easy to find a lease agreement online and read all the details of the deal.

Also, online services have emerged that help verify not only the real estate object but also its owner and authenticity of provided documents. However, a large number of negative stories about unsuccessful rentals help many understand that an agent is necessary.

A real estate specialist saves time and money for the client.

Without experience in real estate, it's impossible to anticipate all the details. Hence, misunderstanding what should be in contracts and "why they are so big if everything can be written on a single sheet." Everyone suffers. Some from the fact that tenants leave behind "Stalingrad" in the apartment and it's impossible to file complaints: they just disappear. Others from being evicted when they don't expect it or not having their deposit returned at move-out.

Apartment for rent, design: Tatiana Lushina

Client Pays

When I came to real estate eight years ago, I never thought about why agents who rent apartments take a commission from tenants they see for the first time?

Now I build my work according to the principle "the client pays." If a property owner hires me, then I must protect their interests, and they should pay for my work. If someone seeks help in selecting an apartment, I build my work around the tenant's interests.

In business and luxury real estate segments, this logic works well, and agents successfully rent apartments without charging tenants. In the economy segment, I think greed hinders this. But happily, I'm starting to meet agents who work on the same logical principle as I do.

I support the development of the industry and am in favor of IT technologies. I'm a former member of this sector and continue developing online services for the real estate market.

Some services make money off the misunderstanding of the benefits of working with a professional agent, pushing property owners and tenants to do everything themselves and not pay anyone or use online platforms. Unfortunately, such initiatives often lead to dramatic confirmations of the saying "stingy pays twice."

Perhaps in the future, a service will emerge that can anticipate many nuances and details, protecting the interests of all parties. I will only be happy about such a service, because it is for people.

Apartment for rent, design: Victoria Vlasova

What the Online Service Representative Says

Eugene Luchinin, expert, founder of the online rental service The Locals

About Changes

It was very difficult to find an apartment with a commission less than 100% before. Now, the most common commission is 50%.

I wouldn't say that the real estate market has changed significantly. But there are some small shifts. Property owners now have the opportunity to post their listings on various platforms and find tenants more easily without intermediaries than it was 5–7 years ago. Realtors also felt this and started reducing commissions.

What Tenants Are Willing to Pay Extra For

There are more picky tenants who want a particular style of renovation, let's call it "Scandinavian classic": minimal furniture and white walls.

Price, proximity to the center and metro, of course, are the most important parameters. However, an apartment whose owner is willing to make concessions: removing furniture, agreeing to joint renovation with the tenant, - rents much better than apartments with carpets and wall panels, which are still the majority on the market.

tenants are willing to pay extra for beauty. In our practice, there are deals where a one-bedroom apartment far from the center and metro was rented for 100,000 rubles because of its very classy renovation - even for a magazine!

Realtor Is Not a Necessary Participant

The role of a realtor today is minimal.

He is needed when renting expensive apartments, over 100,000 rubles: there are many details to coordinate, and property owners are usually busy people who are hard to negotiate with and prefer to delegate apartment affairs to a realtor. But in most cases, property owners and tenants manage on their own.

What Tenants Say

Maks Kitaev, art director, has been renting apartments for seven years: "It seems that in terms of rental, nothing has changed - pleasant apartments for reasonable prices are still one or two out of a hundred offered. Of course, I don't want to overpay in rent under any circumstances, but I'm willing to add a little for comfort and personal preference in some details. The most important factors for me are style, the mood of the apartment, and the absence of hidden traps. If I were to briefly list the criteria for acceptable housing, there are only three: white walls, minimal furniture, and location in the center. It's very important that the apartment owner is not a nutcase, unfortunately, there are many such people. As for the lease agreement, it doesn't have special significance for me - I'm more or less mobile, can quickly pack and move out."

Ksenia Esina, photographer, has been renting apartments for six years: "Throughout the period, I've changed four apartments in different Moscow districts. There was a time when I lived in a terrible apartment in Kuz'minki with three neighbors and carpets on the walls. Now, I definitely won't accept such conditions. My priorities are comfort and transportation accessibility at any time of day. It's important that the apartment has a good renovation, no clutter, and the district is quiet.

I found all my apartments in social networks or through acquaintances. I had a negative experience communicating with a realtor who disappeared as soon as he received the deposit. Also, I occasionally hear negative reviews about realtors from friends and acquaintances, so they not only don't inspire trust but are associated with fraudsters, just like the sites where they operate, like CIAN. I definitely won't use their services in the future."

Maria Biryukova, analyst, has been renting apartments for ten years: "More and more property owners who rent out their apartments are investing in the renovation - thus, these are no longer fully depreciated apartments that they rent out when they don't want to live there themselves, but rather pre-planned spaces for rental with simple but fresh renovations, without a pile of dusty sofas and carpets. More owners have become dog-friendly and readily agree to the possibility of moving in with a dog.

My main priority for choosing an apartment has always been and remains its location and interior finishing, especially the condition of the bathroom. A realtor is not important to me: thanks to the Internet, all housing can be viewed on websites, in groups, and discussed over the phone.

I also consider the presence of a lease agreement unnecessary, although they always signed it with me. I don't believe that it has any legal force. When assessing the apartment owner, I rely on my intuitive perception of the person, and then it's up to them how convenient it is: we can sign a contract if needed."

What Designers Say

Anna Kovalevchenko, expert, founder of the design studio L'Essenziale

Design Is Prioritized

Considering two apartments with the same location and size, a potential tenant will likely choose the one with a designer renovation, even if the price is higher.

The number of orders for designer renovations for rental apartments is growing. If earlier the discussion was mainly about Airbnb apartments, now even those planning to rent apartments for long-term lease think about designer renovations.

Moreover, apartment owners invest not only in renovation but also in increasing the comfort of housing by purchasing additional accessories, such as a coffee machine.

Details

In such projects, there is no clear technical specification, as the apartment owner does not renovate for themselves but for others. A concept must be devised that will appeal to most people.

The owner considers such an apartment an investment, so timeframes and budget play a huge role in the return on investment. Usually, the apartment is asked to be "launched" as soon as possible, so it's necessary to work at a very fast pace.

The budget is also often limited: one has to find cheap but creative solutions, such as an unusual wall paint.

Apartment for rent, design: Anna Kovalevchenko

Natalia Voronenkova, expert, head of the design and architecture studio "20:18"

Stricter Conditions

Two years ago, a typical economy-class one-bedroom apartment was rented in two days. Today, exactly the same apartment finds its tenant only after 2–4 weeks, and only after lowering the price.

In our view, the rental housing market has significantly changed over the last 3–5 years, not only in Moscow but also in other major cities like St. Petersburg. This is related to the large flow of migration from regions, thanks to which rental housing prices change rapidly and conditions become stricter.

The peak of demand for designer renovations came in late 2017–early 2018 and continues to grow: to rent your property as profitably as possible, it must significantly differ from competitors. In this case, designer renovations help a lot.

Apartment for rent, design: studio "20:18"

What the Apartment Owner Says

Anna Gavrilova, owner of an apartment with a designer renovation for rental

Goal - Ideal Tenant

Today's apartment renter prefers modern clean apartments without excessive furniture.

Naturally, even a modest designer renovation increases the chances of finding a tenant who will appreciate and respect the apartment, where it's beautiful and comfortable.

My goal is to attract exactly such a person. Then, rental business will bring income and not become disappointment and stress, with constant need for renovation and updating the interior.

Perhaps the Soviet past taught me to treat real estate with piety: it is a kind of fetish, a symbol of home, family hearth, and well-being. Therefore, I believe that designer renovation is important for finding the ideal tenant who will appreciate, preserve, and increase my investment.

Apartment for rent, design: Anna Kovalevchenko

Cover: Design project of studio "20:18"