Property management & leasing
Lease Renewal: Definition & Example
What Is a Lease Renewal?
A lease renewal is an agreement between a landlord and a current tenant to extend the tenancy for another term, often with updated rent or conditions.
What does lease renewal mean?
As a lease nears its end, the landlord usually sends a renewal offer 60 to 90 days before expiration. The offer states the new term, the new rent, and any changed terms. The tenant can accept, negotiate, or decline and move out.
Some leases renew automatically unless one side gives notice, and some states regulate these automatic renewal clauses. Rent-stabilized and rent-controlled units may have legally limited increases and a tenant right to renew.
For property managers, renewals are usually cheaper than finding a new tenant because they avoid vacancy, turnover work, and leasing costs.
Lease renewal example
Ninety days before a tenant’s lease ends, the manager offers a 12-month renewal at $1,545 per month, a 3% increase over the current $1,500. The tenant counters with a request for a new dishwasher, the manager agrees, and they sign the renewal.
Related terms
- Lease AgreementA lease agreement is a contract between a landlord and tenant that sets the rent, the term, and the rules each side must follow while the tenant occupies the property.
- Month-to-Month TenancyA month-to-month tenancy is a rental arrangement with no fixed end date that renews automatically each month until the landlord or tenant gives proper notice to end it.
- Tenant TurnoverTenant turnover is when a tenant moves out and a new one moves in, along with the costs and vacant time that come with replacing them. It is often expressed as an annual turnover rate.
- Market RentMarket rent is the amount a rental unit would likely lease for today on the open market, based on comparable units nearby with similar size, condition, and amenities.
Lease renewal FAQ
- Does a landlord have to renew a lease?
- In most places, no. Exceptions include rent-stabilized units and cities with just-cause eviction laws, and a landlord cannot refuse renewal for a discriminatory or retaliatory reason.
