Lease Renewal And Extension: How To Go About It?

As a landlord, it is important that you know how to go about lease renewal. Knowledge of this process will make your job easier when the time comes for tenants to extend their lease.


Why Offer a Lease Renewal?

Being a landlord definitely poses a lot of advantages, chief among them being how lucrative the opportunity is. But, to earn rental income, landlords need renters. And while renters occupy an estimated 43 million housing units in the United States, they don’t always stay in the same rental property. Renters shift and move, leading landlords to find new tenants all over again.

As a landlord, you know that finding good tenants can be a headache. As such, you want to keep them around for as long as you can. This is where lease renewals and extensions come in.

When you renew a good tenant’s lease, you can avoid the trouble of having to market your property and screen tenants all over again. By renewing the lease of an upstanding tenant, you are assured of continued and on-time rent payments as well as proper care of your property. You also ensure occupancy, which means your rental property can keep generating income.


Understanding the Lease Renewal Process

Renewing a tenant’s lease might seem easy in theory. But, there is a lot that goes into the process. Here is how you should go about lease renewal.



The first thing you must do to ensure a smooth lease renewal process is to organize all of your tenants’ leases. Group them according to duration and keep a spreadsheet indicating the expiry of each lease. A property management software comes in handy for this, though you can always outsource the job to a property manager as well.

Make sure you have all documents prepared and standardized. Have a set communication channel, too, so you can easily look up any records if need be. Remember that all communications should be made in writing to avoid disputes down the line.


120 Days Before Expiry (4 Months)

The actual extension process ideally starts 120 days in advance. Four months before the expiry of your tenants’ leases, start looking into which tenants you want to offer renewals to. Here are the things you should consider when evaluating eligibility:

  • Has the tenant been paying their rent on time and in full?
  • Does the tenant make an effort to take care of your property?
  • Has the tenant violated the lease terms throughout the duration of their stay?
  • Is the tenant respectful to you and their neighbors?

Of course, beyond what you think of the tenant, it is also important to know what the tenant thinks. Are they even looking to renew their lease in the first place? Try to get a grasp on their intent to leave or stay without promising anything. Just because you are inquiring does not automatically guarantee a renewal.

If a tenant intends to terminate their lease at expiry, find out why. Perhaps there is something about you or the property that they don’t find satisfactory. You must also remind them to send you a notice of non-renewal of lease. This way, you can have everything in writing.


90 Days Before Expiry (3 Months)

After gauging tenants’ intent to renew, it is time to figure out the terms of the renewal. This is when you would negotiate any rent increases and new lease terms. Your tenant might want to add something to the agreement, too, so make sure to get their input. Of course, if their request is unreasonable, you don’t have to include it.

When determining a new rental rate, don’t forget to take the market into account. Look at similar properties in your area and find out how much they are charging. You may also want to increase your rate if you recently renovated the property or added amenities.


60 Days Before Expiry (2 Months)

Two months prior to the expiry of the lease is when your tenants should provide you with written confirmation of their intentions. Send them a lease renewal letter that they can respond to. A property management software can make this part of the process simpler through automation, but communicating via email or traditional mail is also acceptable. Then, have them sign the lease renewal agreement.

The reason you want to get their plans in writing is so that you can give yourself time to prepare. By doing this 60 days before the lease expiry, you can buy time to find a new tenant and have them move in by the time your current tenant leaves.


30 Days Before Expiry (1 Month)

Finally, with only a month to go, you should verify that all renewing tenants have signed their leases. If there are any left unsigned, follow up through email or using your property management software. If there are some tenants who aren’t renewing, your tenant search process should be underway by this time.


What to Include in a Lease Extension Agreement

It is much simpler to write a lease extension agreement than an actual lease. This is because lease extension agreements only contain a few details. Here are the items you should include in a lease renewal agreement:

  • The names of the parties involved (i.e. the landlord’s name and the tenant’s name or names)
  • What to Include in a Lease Extension AgreementAddress of the rental property to which the lease agreement pertains
  • The start date and end date of the original lease
  • A statement that both parties agree to extend the lease
  • The duration of the extension (ex: 6 months, 12 months, etc.)
  • The rental rate or any increases
  • A statement enforcing the continuity of the original lease terms
  • Signatures of both parties


The Bottom Line

Landlords aiming to get a lease renewal or extension from their tenants should start early, at least 120 days before the expiry of the original lease. This way, you can give yourself sufficient time to prepare all necessary documents and negotiations. And, if the tenant intends to leave, you won’t be rushing to find a new tenant to replace them. If you have a bad tenant, though, it is best not to renew their lease even if finding new tenants can be a difficult process.

Managing a rental property is often time-consuming and troublesome. If you want someone else to handle your lease renewals as well as other aspects of property management, hire a professional. Find property management companies in your area with the help of our online directory!