Falling market rents vs. current tenants?

Looking for some insight from others who may have experience with this scenario:

Mr. Smith moved into Apt. #1 2 years ago when the market rate for a 1 bedroom was $850. Mr. Rogers moved into Apt. #2 (next door to Apt #1 & identical layout), 1 year ago at the market rate of $825. Both had lease renewals due last month. Since that time, more vacancies & the market have rents down to $795-$775 for a 1 bedroom.

Lease Renewals were due for both Apt #1 & #2 last month. For nearly 6 month's all lease renewals that are above the current market rent have not had any increase. Mr. Smith renewed his lease last month for $850 & Mr. Rogers did the same at $825.

Mr. Smith found out Mr. Rogers is paying $25 less and wants to know why he is paying more than Mr. Rogers. Mr. Smith has even heard of other tenants who are paying $75 less than him and wants to know why he is not offered these rents? Mr. Smith accuses management of discrimination, but technically management was not raising rents for anyone. Is management in the wrong?

Whats the best response to Mr. Smith's questions? What actions can management take to retain residents & keep the income of the building from falling even more?

He doesn't have a discrimination complaint unless he can prove that the reason for his rate, or lack of a discount, is because of his membership in a protected class. Because this scenario doesn't indicate that, he is just paying a different rate. If someone goes into a bakery at 9:00 PM and orders a bagel and it is $1.50, and someone comes in at 10:00 PM and they get charged .75 because they are closing, that isn't discrimination - that is opportunity. Explain the market functions to Mr. Smith and why he may have initially been charged a higher rate (market conditions, time of lease signing, length of agreement). The way to prevent, however, is to move everyone to a reasonable figure upon renewal. Some people will have a drop, some an increase, others stay steady. Short-sighted owners don't see that way, they just want the revenue to increase, not thinking of the possible ill will that a situation like this can create.

You know this, I know this; but the number of nuisance lawsuits clogging the justice system says that there are folks that are willing to try if there is ANY appearance of impropriety that affects them in a negative way.

Even if a resident has a baseless claim; this will not prevent him from trying.

This is why I do not like financial move in incentives; I prefer small unit upgrades if I have to offer a gimmick. If the resident moves in and the rent is $x, and they are offered a monthly rent discount, they view their rent as $y and when they are asked by friends or neighbors what their rent is, they will NEVER say that their rent is $x. This is how confusion occurs between residents. This confusion can result in bad feelings towards management.


I would like to see a response that explains this well enough to accomplish 2 things; 1) it keeps the resident, and 2) it keeps the resident from trying to file a nuisance claim.