How to Renew the Lease for Your Tenancy
Find out how you can renew the lease for your property with the help of RentBetter.
Understanding Lease Renewals - The benefits of renewing the lease on your property and how to go about it.
So the time has come for your first lease renewal in your tenancy. Perhaps you're wondering what the advantages of renewing your lease are compared to the benefits of letting your tenancy roll into a periodic agreement.
A lease renewal is usually preferred by landlords over a periodic agreement because it offers stability. And the same can be said for tenants. When left on a periodic tenancy, a tenant may feel uncertain about their situation and start looking for a new rental property that provides more stability.
The Benefits of Renewing Your Lease as a Landlord
Keeping your current tenants in your property is often a much easier option, especially if things are going well. As the saying goes, don't mess with what works! We cover the process of increasing the rent in a separate article, but that may also be relevant at renewal time.
There are several benefits to renewing your lease when the time comes:
- Avoiding the hassle and expense of finding new tenants. Finding new tenants can be time-consuming and costly. Every time a tenant moves out of your property you will face costs associated with advertising the property and potential lost rent so keeping them on will avoid any unnecessary stress.
- Reducing Uncertainty. A periodic agreement can be stressful for everyone, as there’s no set end date and can be terminated by serving the adequate notice required by your state or territory. Signing on for another fixed term ensures stability and guaranteed income.
- Keep the relationship you’ve built with your tenants. You will have likely built up a good relationship with your current tenants throughout the course of your lease. When you find a tenant who takes good care of your investment property and pays the rent on time, consider renewing the lease and keep that positive relationship going.
Pro tip - If you're using RentBetter to manage your property when it's time to find a new tenant, you won't have to pay to advertise your property again.
How much notice do you need to give to renew the lease?
If you’re coming up to the end of your current lease and you’d like to renew it with your tenants it’s best to give as much notice as possible - we advise giving at least 2-3 months’ notice. The more lead time you give, the better prepared both you and your tenants can be.
Your notice of intention to renew the lease should be given in writing, via email. There are no specific forms you have to use to serve your intention to renew however if you decide to increase the rent, you’ll need to provide adequate notice according to your state.
Without either party giving the notice to terminate, the tenancy automatically continues as a periodic agreement or, commonly referred to as a ‘month-to-month’ agreement.
Reviewing your rates - Should you raise the rent?
In order to decide whether to raise the rent at your investment property, you really need to know what comparable properties are going for in the current market, and decide if you are satisfied with the tenant you currently have?
Most tenants expect to see their rent increase as market conditions evolve but as a landlord, you need to decide whether you want to risk losing a good tenant with a rental increase. In most states, landlords are only allowed to increase the rent after the fixed term period of the agreement has ended, although there are some exceptions to that rule.
Looking for information on how to price your property? Download a FREE Rental Estimate Report.
Once you determine if you can raise the rent, you will need to inform your tenants in writing. Depending on your state, the exact notice period varies (see the below link for details), but you must always indicate the amount of the increase and the date it will become effective.
Read more - Knowing the Right Time to Increase the Rent
How long should the term of the new lease agreement be?
In the event that the tenant is happy with the property and is keen to stay, you could consider offering them another 12-month lease, or a shorter term, such as 6 months. A fresh lease will give you more certainty but keep in mind that it also means you can’t raise the rent until the new contract is up, so it’s a wise move to evaluate your rates before any agreement is signed.
Changes to other terms in the agreement
It is fairly straightforward to renew a lease without any increase in the going rent or changes to the terms. If there are changes you’d like to to the lease terms such as allowing for pets or anything not in the original agreement, you should make sure to adjust your new lease to reflect these terms.
The Lease Renewal Process
Let's break it down into 4 simple steps:
- You should start by contacting your tenant with your intention to renew and gauge their interest before the date that your lease expires - we advise at least 60-90 days.
- Evaluate the current terms and decide if there are any changes to be made such as rental increase or other changes to the terms of the agreement.
- Come to an agreement with the current tenant over the new terms.
- Prepare the new lease and send it to your tenant to sign.
How can RentBetter help you with your Lease Renewal?
On RentBetter you’ll receive automatic reminders when your lease is due for renewal so you can be prepared well in advance. With the click of a button, you can renew your lease online with your current tenant.
If you need to create a Lease Agreement for new tenants, we have you covered here too, you can create, view, send & sign your lease agreement through the platform.
Your property details are pre-populated and the tenant's details and the lease terms can be entered in quickly. You and your tenant will be able to digitally sign your lease online within minutes if you're signed up for the Match, Manage, Maintain or Manage & Maintain plan.
