My rental contract is due for renewal in a few months.
Currently, in the UK, house prices are decreasing, so it seems fair to ask for a slight decrease in rent to represent market rates.
Ideally, I'd also like the contract amended to remove the ban on owning a dog.
I have been in the property for 1 year and have always paid rent on time. Before I moved in it was vacant for at least 2 months.
What's the best way to negotiate this?
House prices and rents aren't always highly correlated - if rental demand is high then rents and home prices can actually go in opposite directions (but may eventually reach an equilibrium).
So what you should look for is rents for other, equivalent houses. If those are lower, then you might have some bargaining power.
What's the best way to negotiate this?
You need some sort of leverage. You do have slight leverage in that you've paid your rent on time (rental owners appreciate this because it's less risk), but probably not enough to lower your rent. If market rates for rentals are down then your leverage is that you can move somewhere else and lay less rent. Without that there's really no incentive for the owner to lower your rent. Put yourself in the owner's shoes - would you lower your income just out of the goodness of your heart, without something in return?
For the dog, the main reason rentals do not allow pets is because there's often significant cleanup costs afterwards. In extreme cases it can mean replacing carpets and repainting walls. One way you might get this allowed is to offer to pay a damage deposit to cover any needed cleanup at the end of the year. Some places even offer a rent surcharge for pets (i.e pay a little more rent to cover cleanup). Like the rent, you need offer something to the owner in return for this allowance.
As D Stanley pointed out, rent and real estate prices are not always correlated. The Brexit vote was a clear example of that with property prices stagnating right after, but rent still increasing in London.
However, that is besides the point - rent is decreasing as well.
Rent negotiations work in the same way as any other negotiation. You need to know the market, your situation and your landlord's situation. If you can get a better deal than constant rent - you have an advantage. If your landlord is unlikely to find another tenant quickly for the same rent - they would lose money and are more willing to lower rent if you ask.
So the three categories:
1) Market. I'll talk about London here, as you didn't specify where in the UK you are. Rent is currently decreasing, however most rental and real estate agencies agree that it's the effect of the pandemic. Airbnb short-term holiday rentals are being pushed out into the long-term market to manage losses. You mention your rent review is coming up in a few months. First thing you have to think about is whether the pandemic and lockdown will end or ease by that time. If yes - your advantage will likely disappear. If no, you have to factor in extra moving costs, see below. Generally, I would not expect current prices to have any bearing on what you can negotiate for a September or later renewal, assuming the lockdown ends early summer.
2) Your situation. Here you have to figure out how bad will a move hit you personally. A typical move for me set me back around 1000 pounds - that's inventories, contracts, movers, deposit deductions as well as travel costs to do viewings. Note that during the pandemic you might be hard pressed to find cheap services - most rental agencies are "virtual" now, and movers aren't classified as essential business. Finding good alternative accommodation will be difficult if you can't leave your house.
3) Landlord's situation. They will be very hard pressed to find a new tenant for the same money during the pandemic. If you say that the property has been vacant for 2 months, then their losses are likely going to be 2-3x monthly rent in either decreased revenue or mortgage payments, maybe more.
All in all, you stand a decent chance if the timing is in your favor. You will likely be asked whether you want to extend 1-2 months in advance. You'll have a couple of weeks to think about it. Use that time to do some viewings of similar properties. If the pandemic just ended, the rents are still lower and you can do the move without much extra cost, you can simply say so to your landlord. Once they receive your offer, they'll do their own research on the market, and if they estimate their losses from looking for a new tenant and negotiating a new rent are too much, they'll give you what you want, or, more likely, offer mid-way. That's assuming everyone is cool-headed and diplomatic, a big ego on either side can make or break it. If, however, the timing is such that you cannot easily move out because of the pandemic, or that the market already reversed, you probably won't get your decrease.
The rental contracts I have seen in the UK have an option for a rent increase on a yearly basis. This was usually waived when there was no major increase in the rental market that year, but this meant decreasing rent was very unlikely - the tenant just had the option between higher rent or constant rent. So first I would suggest OP double-checks that there is no such clause in their contract.
Paying your rent on time is not really a big plus to a landlord if that is what most of their tenants do - it will only be seen as such if a lot of tenants don't. Given the current situation there may be a lot of tenants who are unable to pay their rent but OP should also be careful that they can maintain their rent payments over the next few months.
The "no pets" clause is also standard in the contracts I have seen. Sometimes it can be negotiated (usually at the cost of an extra cleaning/repair deposit as others have mentioned) but sometimes a landlord feels strongly about not wanting pets, or it is required by the community (eg an apartment block or a house divided up for multiple renters). The best thing in that case is simply to make an inquiry about whether it is an option to have that clause removed, but bear in mind this may make OP a less-desirable tenant in the landlord's view.
