A Complete Guide to Lease Renewals

Whenever a lease term ends, residents have an important choice: renew their lease or move to a new place. For some residents, renewing is an easy decision, especially if they are satisfied with their home and rental terms. For others, it might be more complex, requiring consideration of renewal rates, updated lease terms, and other personal factors like job changes or lifestyle needs. 

As a resident, carefully reviewing your options before deciding is crucial. Our comprehensive guide provides insights to help you understand this process seamlessly. Whether you are renting a unit for the first time or have renewed leases before, this guide offers everything you need to make an informed decision that aligns with your goals for the future. 

What Are Lease Renewals? 

When a resident decides to continue living in a rental property beyond the agreed-upon time frame, a process of lease renewal occurs. Renewing a lease either involves drafting a brand-new lease with new terms, rules, and regulations, or extending the terms outlined in the original lease. Either way, the property owner and the resident must agree on the conditions and sign the renewed lease before it goes into effect. 

Benefits Of Lease Renewals 

As a property manager or owner, renewing more leases helps improve the bottom line. Some of the known benefits of lease renewal include: 

• Reduced turnover costs: Renewing a lease saves a substantial amount of money. It costs a lot more to acquire a new resident than to retain one. 
• Save time on filling a vacancy: Marketing, advertising, and administrative tasks associated with filling a vacancy take a lot of time. Save time and money by renewing more existing leases. 
• Reduces maintenance: When a resident moves out, a property owner or manager’s maintenance team has to work rapidly to clean and repair the vacant unit. This may lead to additional costs and delays in other residents’ requests.  
• Keep reliable residents: Good residents are hard to find. So, it is best to retain the residents who are responsible, reliable, and pay their rent on time. 
• Build a stronger community: Reliable residents who renew their leases year after year spend more time getting to know their neighbors. Retaining residents longer creates a stronger community base and, therefore, a better resident experience.  

What Happens When Your Lease is Up? 

At the end of a lease, there is an option to renew, extend, or terminate it. This choice depends on factors such as budget, living experience, homeowner relationship, location, and lifestyle. Selecting the option that best aligns with personal needs ensures the right fit. 

• Renew a Lease 

Renewing a lease typically begins a new term on the current property, usually with similar conditions to the previous lease but with some rent adjustment. Rental rates generally increase by 2-5% annually, so assessing the budget beforehand can be helpful. 

Negotiations with the property owner or manager on rent and other lease terms are possible, making the renewal period an ideal time to discuss desired adjustments, such as pet policies or maintenance services, to ensure the lease aligns with personal preferences. 

Property owners or managers will generally send a renewal notice 90 days before the lease ends, mentioning any changes to lease terms. This notice will invite the resident to either sign and return the lease or inform them of non-renewal plans. 

• Extend a Lease 

Extending a lease allows residents to remain in their rental for a shorter period than a full lease term, which is ideal for those preferring a temporary arrangement over a year-long commitment. 

Sometimes, a lease extension is available if the property owner cannot offer a full-term lease due to upcoming renovations or plans to sell the property. A month-to-month extension offers extra time to find a new home. 

Unlike a fixed-term lease, a month-to-month agreement does not have a set monthly rent, meaning rent may fluctuate.  

• Terminate a Lease 

Choosing to end a lease provides an opportunity to explore new rental options. Terminating a lease can be a positive experience, often motivated by changes like relocating for a job or buying a home, though sometimes driven by property or rent concerns. Giving proper notice and following lease terms helps ensure a smooth transition and avoids any sort of additional fees. Reviewing the lease agreement and local laws is key, as most property owners require a 30- to 60-day written notice before moving out. 

What Should You Consider Before Renewing Your Lease? 

Renewing a lease involves several important considerations. While the current unit may feel like home, external elements might influence the decision to stay. Perhaps the location no longer aligns with lifestyle needs, or a rent increase could stretch the budget. Before renewing, consider these key factors: 

• Property Condition 

Assess the property’s current condition before renewing. Check for any pending maintenance issues, necessary renovations, and how efficiently previous maintenance requests were addressed. These questions help evaluate the property’s readiness for another full-term lease. 

• Relationship with Owner 

A strong relationship with a homeowner significantly impacts the living experience. When a property owner is responsive to requirements, clear and transparent about inspections and lease terms, and respectful of personal space, renewing the lease is a good choice. However, if ongoing issues or conflicts have arisen, it may be better to terminate the lease. 

• Location Convenience 

Location is an important factor in lease renewals. A short office commute and easy access to amenities like grocery stores, parks, and restaurants make staying an appealing option. However, changes in job or lifestyle may lead residents to seek a new location that better suits their needs. 

• Cost Changes 

As rent increases are expected with lease renewals, a substantial rent hike may require a budget re-evaluation to ensure it is manageable. Negotiating the price could also be an option. If neither works, forgoing renewal might be necessary. 

How to Renew a Lease 

Renewing a lease depends on individual needs and negotiation skills, so it is important to carefully understand the pros and cons before signing. 

1. Read the Renewal Letter 

Start by carefully reviewing the lease renewal letter sent by the property owner, typically 30-60 days before the lease expires. This document consists of details, including the new lease term, rent amount (possibly with an increase), and any changes to existing terms. Reading the letter clarifies available options and highlights the options that may require negotiation, helping informed decisions. 

2. Understand the Rental Agreement and Rental Rights 

Understand the important points of the lease renewal process, including timelines and any unique terms. Most leases require renewal decisions to be communicated 30-60 days before expiration. It helps by reviewing the lease early, avoiding penalties or missed opportunities. Clear, early communication with the homeowner can also help with negotiating better terms. 

3. Consider Negotiating with the Property owner 

Property owners often prefer lease renewals over the costs associated with finding new residents. Research rental rates in the area and review the lease for any clauses on rent increases or renewal procedures. Be proactive in approaching the homeowner early, maintaining a professional and respectful tone while focusing on a solution that benefits both parties. 

4. Make a Renewal Decision 

After considering the homeowners’ offer and comparing it to market rates, consider factors like moving costs and the value of staying instead of relocating. 

a) Sign the Lease Renewal Letter 

Once you decide to stay, sign the lease renewal letter. Ensure any negotiated terms, such as rent adjustments or requested changes, are included in the letter. 

b) Review the New Lease Carefully 

After receiving the new lease, review it closely to ensure all agreed-upon terms are included. Pay attention to every minor detail. 

c) Make the New Lease Termination Date 

Finally, note the new lease termination date on the calendar to prepare for the next renewal cycle. 

Lease Renewal Tips for Resident Retention 

Wondering how to retain the residents? Here are four ways to get more lease renewals: 

1. Be Smart About Rent Increases

A sudden increase in rental rates is one of the main factors that can discourage residents from renewing their leases. Significant rent hikes may become the tipping point that prompts a resident to consider moving. Researching comparable market rates carefully in the area is a smart approach, as moderate increases of 3 to 5% typically receive little pushback. However, if current rental rates are already above the market average, raising the rent further could be a risk. 

2. Make The Renewal Process Legal & Seamless

If the renewal process is complex, expensive, or time-consuming for the resident, they might reconsider and plan to move elsewhere. So, as you approach the residents’ lease renewal period, it is better to prepare yourself and ensure the process goes smoothly. 

Here are four simple steps to renewing a lease seamlessly: 

• Adhere to state laws 
• Send a thorough lease renewal letter 
• Draft a new lease 
• Finalize the lease renewal
   

Pro-Tip: While the typical notice period is 30 to 60 days, sending a renewal notice 90 days before lease expiration can be beneficial. This allows residents ample time to consider the offer and respond. Additionally, if a resident chooses not to renew, there is sufficient time to begin the search for a new resident to fill the vacancy. 

3. Offer Incentives 

Having a reliable and trustworthy resident in a rental home makes offering incentives an excellent way to encourage lease renewals. Renewing a lease saves both money and time. Opting not to increase rent when renewing the lease helps retain great residents. Additional ways to sweeten the deal include: 

• Offer a free month, rent credit, etc. 
• Include a gift card with your rent renewal notice. 
• Invest in sweet gestures throughout the year (e.g., sending residents a card around the holidays or a coffee shop gift card on their birthday). 
• Offer a new appliance, new plumbing fixtures, or fresh paint. 

4. Invest in the Resident Experience

The easiest way to secure more lease renewals is by ensuring residents feel comfortable in their space.Investing in the resident experience helps create a homely environment, making it less likely for them to want to leave. 

Some of the finest ways to create an unbeatable resident experience include: 

• Handle maintenance requests quickly 
• Host resident events 
• Enable smart access throughout the building 
• Make a strong first impression 
• Invest in a delivery management solution  
• Maintain open communication 

Streamline Property Management with BFPM 

Maximize NOI and save time with Beach Front Property Management. With years of experience and expertise, our team makes lease renewals easy while encouraging residents to stay. By choosing the right property management company such as BFPMInc., higher renewal rates and lower turnover can be achieved. 

Attention to state and local laws ensures stress-free lease renewals for both property owners and residents. Feel Free to reach us at BFPMInc.