Today, I continue on the previously explored theme on how economics can create reactions others might find as odd. In my earlier take on this, I described how I am very often glad rather than resentful that a particular good or service requires payment – even (especially?) when its something I really need. For this occasion, I want to discuss an article I recently read where someone is describing “revenge” they took on a former landlord, and why I think their anger was entirely misplaced.
The story, if you wish to read it, can be found here. The person in question is describing how years earlier, in the 90s, he and his wife had been renting a property from a real estate agent. They were coming to the end of their lease, and had a house lined up to buy, but the timing wasn’t quite right. So he asked the landlord if they could do a month-to-month arrangement for a couple more months while the home sale and moving preparations to be completed. From the article,
A year later, we found a house to buy. We weren’t quite ready to move in, though, so I called the landlord and said we needed two extra months in the apartment. He agreed and told me he’d send over an addendum to the lease for those two months. Know what that addendum contained? A 50 percent increase in rent! I lost my mind. I called him up and asked him how he could double our rent. It wasn’t fair!
Already there is some innumeracy showing through in this article – was it a 50 percent increase in rent, or a doubling of rent, aka, a 100 percent increase? Based on what the rest of the article says I’m inclined to think it was the former rather than the latter. He later identifies it as an increase of $500 per month, and I think an increase in rent from $1,000 to $1,500 is a more likely scenario than from $500 to $1,000. But let’s breeze past that and talk about why I think this situation that infuriated this person is actually pretty mundane.
I’ve rented numerous apartments over the course of my life, and the situation this gentleman found so outrageous is just a normal part of how rentals work. When my wife and I first moved to Minnesota, we found an apartment we liked and applied to rent. The lease came with a variety of options for length, with a price that adjusted accordingly. You could lease the apartment for as little as nine months, but then your rent would be very high, or you could sign a lease for as long as eighteen months and the monthly rent payment was much lower. If you renewed for a new long-term lease once your initial lease had run its course, there would be a relatively small increase in the rent. Alternatively, you could just switch to a month-to-month arrangement, but the increase in the rental rate would be very large. Again, this has been the case with every rental I’ve ever used.
There is always a higher price to pay for shorter term arrangements rather than longer term arrangements. Just imagine you owned an apartment building. Wouldn’t you prefer a situation where you have lots of long-term occupants with a relatively infrequent turnover rates, compared to situations where the occupants are constantly coming and going with short-term arrangements and turnover rates are very high? The latter situation comes with much more uncertainty and much higher transaction costs – and that is reflected in the higher price. If I was a landlord, a six month lease is much less attractive than, say, a two year lease. If someone signs the latter, I know that this property will be occupied and generating income for me for the next two years. If it’s the former, I know I’ll have to go through the time and trouble of finding another tenant six months down the road, and the property may sit empty for some time until I find another tenant – generating expenses for me but no income. So naturally, I’d charge more for short term leases and month to month extensions than for long term contracts.
The disgruntled renter actually makes this point himself in the article without realizing it. He describes how, in his anger, he looked up options for just leaving at the initial end of his lease and working out short-term living and storage conditions until he was ready to move into his new house – only to find that doing so would be far too expensive to work. The higher, short-term rate for his present apartment wasn’t some arbitrary increase – it just happened to reflect the normal market rate for short-term rental arrangements, while saving him the extra time and hassle of doing two moves in two months.
He also expresses anger that his landlord withheld $300 from his security deposit for cleaning after he left, despite assuring the readers that he left the place in pristine condition. Whether or not this is true depends on if his perception of how thoroughly clean the place was really matched reality – I certainly know many cases where people insist (and believe!) they have done an amazing job at something when the actual result was pretty substandard.
The final source of his outrage came when he saw the apartment listed after he moved out and he saw that the new, long-term tenants wouldn’t have to pay the same rate he did for his short-term arrangement:
We found the classified ad, and he didn’t list the new rent at $500 more. He listed it for just $100 more than we were originally paying. For a while, no one leased it. And when they finally did, it was for only $75 more a month than we were paying.
But, again, that listing was reflecting the rate for a new, long term contract rather than month to month arrangement. While my wife and I were living in that first apartment in Minnesota, we too did a month-to-month rate at the end of our lease while we finished up the home buying process. Those extra couple of months were also significantly more expensive. Yet I never bothered to look back to try to see what the apartment was listed for after we left. Had I ever done so, I never would have expected that the next person to move in on a long-term contract would have to pay the rate we paid for a short-term extension.
But my reaction was apparently not the same as this gentleman. He instead made himself miserable with a sense of anger and grievance that seems entirely unfounded to me. And while I went on with my life as normal, he stewed with anger over it until later, he found a chance to sabotage a real estate deal his former landlord was about to close, in order to cost him $25,000.
I’ll leave it to you, dear EconLog reader, to decide whether my reaction or his was the more psychologically healthy and reasonable one.
READER COMMENTS
David Seltzer
Jul 24 2025 at 2:42pm
Kevin: Long term leases reduce the risks in rent roll collection. One of the problems in renting is higher vacancy rates in short term leases. Years ago, I was looking for space so I could set up shop where our traders could work. It was triple net lease, $4000 per month, $48,000 per year. I offered the owner $38,400 up for the year. 20% discount. He agreed. One of my better trades. We were able to deduct prepaid rent as an expense.
Craig
Jul 24 2025 at 5:18pm
I read the linked to story and honestly it feels a bit contrived to be honest or maybe a story with a kernel of truth.
“One of the problems in renting is higher vacancy rates in short term leases. ”
Indeed and tenant turnover, you have to go in there, clean up, paint, etc. So a tenant turnover is itself costly, but here this is a continuation holdover tenant situation.
Quoting from the story: “He agreed and told me he’d send over an addendum to the lease for those two months. Know what that addendum contained? A 50 percent increase in rent! I lost my mind. I called him up and asked him how he could double our rent. It wasn’t fair!”
There’s a reason landlords don’t do that: 1. the tenant will not typically not sign such a thing, 2. the tenant will simply holdover anyway, 3. the tenant will stop paying rent and will tell you to take it out of the security deposit and 4. potential revenge damage. Sure you can evict the tenant. Ok, he’s leaving in two months anyway by the time you bring a suit and get a judgment for possession the tenant is gone. So to say the least the story strains credulity.
steve
Jul 25 2025 at 10:41am
I think I am with Craig here. It was a holdover situation. As long as the tenant gave the landlord enough notice it wouldn’t cost the landlord any extra money or time. In that situation, I have been in the same situation, most landlords would either just extend the lease at the same price or a small increase as long as they had a definite time. If the guy had asked for a month-to-month lease with no definite time period then a huge increase would have been clearly merited. In this case it looks like the landlord realized he had the guy over a barrel and extracted a maximum amount.
I have done business with people like that. I cut ties with them as soon as possible. It doesnt make for a good long term relationship. I never really went out for revenge against anyone except when asked for references or my opinion I let others know how we were treated.
Steve
Craig
Jul 26 2025 at 12:39pm
“As long as the tenant gave the landlord enough notice it wouldn’t cost the landlord any extra money or time.”
Indeed and best to keep good relations, congratulate the tenant on achieving a major milestone, “I’m so happy for you and your wife, congratulations” and “No problem, just please communicate with me about the closing date and then when you want to surrender the premises and I’ll cut you guys a check for the security deposit back asap” Tenants will often close, they’ll move over the weekend and then surrender the premises once its empty. They want to surrender it Sunday at 10pm, if practical I’d be there.
I also find the post-tenancy revenge to border on fantasy.
Robert EV
Jul 26 2025 at 2:05pm
I re-read and highlighted on the fact that the landlord was a real estate agent. There are probably more than average sociopaths in that line of work, but on the other hand why would a real estate agent risk alienating a potential future customer who is actively engaged in closing a deal with another future customer?
David Seltzer
Jul 24 2025 at 2:43pm
Meant up front as in prepaid. Apologies.
Craig
Jul 24 2025 at 5:19pm
You can deduct prepaid rent straddling a tax year in Year 1 even if it pays for rent in Year 2?
David Seltzer
Jul 25 2025 at 8:49am
Under the IRS 12-month rule, a taxpayer can deduct a prepaid expense in the current year if the rights or benefits for the taxpayer do not extend beyond the earlier of:
12 months after the right or benefit begins OR
The end of the tax year after the tax year in which payment is made
Robert EV
Jul 24 2025 at 4:18pm
I’m happy about the situation in California where that isn’t an issue. When the lease expires it automatically rolls over into month-to-month at the lease rate. If the landlord wants a higher rent then that landlord gives the lessee an ultimatum: Sign a new lease or get kicked out.
Most of what you write isn’t relevant to the situation you are writing about. They had been in a long-term lease and were informing the landlord of the exact date they would leave, in advance, letting him know when he should begin taking action re-let.
Now if they had previously informed the landlord that they would not be renewing the lease, and the landlord had made arrangements to re-let the apartment at the end of the lease, that is one thing: they have imposed an opportunity cost on the landlord and should pay for it. But whether this is what happened isn’t clear in what you wrote.
If one wants to take monetary advantage of another’s situation then one should know that the other is entitled let one know in no uncertain terms that such action is insulting and harmful. I believe their action is the sort required for justice in a world of people-as-actors. I agree that it’s probably less psychologically healthy, though this, of course, depends on the relative psychology of you and the person you write about. For some people going with the flow takes the highest of psychological health, while for others it indicates the lowest of psychological health.
Robert EV
Jul 24 2025 at 4:35pm
Darn it. I let your language inform my use of language. First and third paragraphs when I wrote “lease” I meant the time-limited signed contract. Second paragraph when I wrote “lease” I meant duration as tenant.
Robert EV
Jul 24 2025 at 4:20pm
Also it’s generally unlawful to deduct cleaning from a security deposit if the long-term tenants had taken pains to clean. Normal wear-and-tear is a cost of doing business under the law of rentals, and should be included in the rental fee.
Craig
Jul 24 2025 at 5:29pm
Standard often referred to as ‘broom clean’ in leases.
Daniel B.
Jul 24 2025 at 7:02pm
I think this story is a great example of why many people hate capitalism (I’m not one of them; quite the opposite) and of the truth of the above quote.
His reaction was indeed wrong, but from his point of view it’s the landlord who was in the wrong for supposedly taking advantage of him. And from the author’s point of view, the landlord is richer than him and apparently likes money more than treating human beings decently and fairly. So the author thinks he has to hit the landlord in the area he cares about more than fairness to human beings – his wallet. And to do that, he has to impose way more than the $500 in costs “imposed” on himself as a tenant. This is because, intuitively, a rich person doesn’t value $500 as much as a poorer person would. I am not a psychologist or familiar with how revenge works psychologically, but I imagine that to him there is a poetic justice in surprising the landlord with more expenses, just like how he himself was surprised with more expenses. I’m not saying this to justify what he did; I only say it to explain it.
I fear that unless a serious effort is made to try to explain the economics behind things, capitalism’s political vulnerability will prove fatal to economic freedom.
If I might make a suggestion: I believe far more attention should be put to healthcare economics or at least reading recommendations for that subject. We saw the reaction some had towards Luigi Mangione’s actions, and I believe it is a similar example to this story of rental revenge. For some people, UnitedHealthcare or other insurers unfairly charge too much for or deny others of medical care – just like how the landlord “unfairly” charged more rent. I haven’t followed that case very much, but I imagine people blame such practices for people’s deaths, so in their minds the CEO only got a taste of his own medicine; to them he got what was coming to him because he “effectively got other people killed” so it is only fair that he himself be killed for that.
I’m not that optimistic about this serious effort being made though, because I believe it’s subject to free-riding problems.
Robert EV
Jul 27 2025 at 12:38pm
On UnitedHealthcare, from what I’ve read they’re experimenting with, or even outright using, AI and other non-reflective systems of people to auto-deny far more claims than other insurers (~30% versus less than 10%). The vast majority of these auto-denied claims get reversed if an appeal is made, but poorer people with UH insurance are less likely to appeal.
I haven’t read on the specifics of the insurance policies involved with these groups of people. But on its face, any system of approvals and denials should be one where a denial is based so firmly on the spelled out policy that a series of appeals overturns the denial only very rarely. And then generally because an explicit exception is being made for humanitarian purposes.
I think some of this may be an issue where the insurer is gaming the system of capitalism: promise more than you’re willing to deliver, at a lower price point than your competitors, on the foreknowledge that you won’t meet your contractual obligations. And then profit. This leads to the foreseeable death of people who were relying on the contractual obligations being met. Such gamesmanship needs to be a criminal violation, not merely civil, as the civil remedies are not enough to stop it.
I’ve wondered about the idea of a government funded (through medicare/medicaid taxes, and the like) health savings plan for everyone, with catastrophic/long-term care insurance additions. The HSPs would be minimally funded by the government, could be added to by the recipients, and would eliminate insurance network provider limitations while encouraging shopping around for care. I don’t know yet whether I’d be in favor of the government funded portions of the HSPs expiring yearly or not. Though if they do expire it should be on a rolling basis (e.g. funded and expiring on a monthly basis).
Mark Barbieri
Jul 25 2025 at 3:54am
The last apartment I rented actually charged us less to go month-to-month than they would have charged for a longer term lease. They were getting ready to sell the complex, so we surmised that they wanted to give the new owners more pricing flexibility. It seemed strange. It worked for us, because we were building a home and the timing of that is always somewhat uncertain.
Dylan
Jul 26 2025 at 1:41am
Based on the details shared, I think I’m with the group here. There’s a big difference between a month to month lease for an existing occupancy vs. one where the person is moving in fresh. Moving to month to month but still giving the landlord visibility into when you’re moving is in fact a benefit, they get to continue to receive income and should be able to show the place while the old tenant is moving out, meaning less time vacant.
I didn’t read the piece on Slate, but I’m curious if the moving to a new place for 2 months the extra costs were the rent, or all of the other costs that come with moving? I know when I first moved to NYC I was paying close to 50% of my gross income to rent, a way too high percentage. When a lease renewal would come, it would typically add another $100 or $200 a month increase, I couldn’t really afford the old rent, it would be unwise for me to accept the higher rent. And, I could usually find a place that would be a little worse than my current place, but for what I was currently spending. But, when I added up the costs from moving, it would eat up the entire savings I would have from the lower rent. I’d have to stay something like 18 months to break even. But, I knew that in 12 months, I’d likely be in the same situation again, with a rent hike being too much for me and having to move again and being faced with two bad options, neither of which were affordable. The only thing that got me through this was depleting savings at a ridiculous rate until the building I was living in suddenly fell under rent control, which is winning the NYC lottery.
I feel for the untenable tenant anger though. I’m in a building right now where many of the tenants don’t pay rent at all. This is probably allowed under the way the NYC law is written, but still these are people that signed up for a lease of $4000+ per month, and now they live rent free without harassment from the management, with services still provided, garbage picked up, electricity, water, the whole bit. And yet the tenants frequently bash them, talk about how they can’t wait for them to go to jail, etc. Pretty crazy in my opinion.