Free Lease Renewal Agreement

🛡️ Good Tenants Are Worth Keeping

If your tenant pays on time, maintains the property, and doesn’t cause problems—keep them! Finding quality tenants is expensive and time-consuming. A modest rent increase is usually better than the risk and cost of turnover.

Screen Your Next Tenant – $39.95

Complete Guide to Lease Renewals

Why Lease Renewals Make Financial Sense

Tenant turnover is one of the most expensive aspects of property management. Every time a tenant moves out, landlords face vacancy costs, cleaning expenses, repairs, advertising fees, and the time cost of showing the property and screening applicants. Keeping a good tenant through lease renewal saves money and headaches.

Real Cost of Tenant Turnover:

• Vacancy loss: 30-60 days average vacancy = 1-2 months lost rent ($2,000-4,000 for $2,000/month property)
• Turnover cleaning: Professional deep clean = $200-500
• Repairs/maintenance: Touch-up paint, carpet cleaning, repairs = $500-2,000
• Advertising costs: Listings, photos, signs = $0-300
• Screening fees: Background checks, credit reports = $30-50 per applicant
• Time costs: Showing property, reviewing applications, processing paperwork = 15-30 hours
• Risk factor: New tenant is unknown—could be nightmare tenant requiring eviction

Total typical turnover cost: $3,000-7,000 per tenant change. Keeping an existing good tenant—even with a modest rent increase—is almost always more profitable.

When to Offer Lease Renewal

Timing Your Renewal Offer:

• 60-90 days before lease end: Ideal timeline gives tenant time to decide
• 90+ days: Best practice in competitive markets to retain tenants early
• 30-60 days: Minimum acceptable notice, but risks losing tenant to other housing
• Less than 30 days: Too late—tenant may have already committed elsewhere

✅ Good Reasons to Renew:

• Tenant pays rent on time every month
• Property is maintained in good condition
• No noise complaints or neighbor issues
• Tenant reports maintenance issues promptly
• Good communication and responsiveness
• No lease violations during tenancy
• Keeps property clean during inspections

❌ Red Flags to NOT Renew:

• Chronic late rent payments
• Multiple lease violations (noise, pets, unauthorized occupants)
• Property damage beyond normal wear
• Neighbor complaints about tenant behavior
• Illegal activity on premises
• Refusal to allow necessary inspections/repairs
• Threatening or hostile behavior toward landlord

Setting the New Rent Amount

Market Rate vs. Tenant Retention:

Landlords face a balancing act: charge market rate rent vs. keep rent lower to retain good tenant. Consider:

• Market rent for similar properties: Research comparable rentals in your area
• Your turnover costs: Remember $3,000-7,000 to find new tenant
• Tenant quality: Great tenant worth keeping below market rate
• Local rent trends: Rising, stable, or falling market
• Property improvements: Justify increases with upgrades made

Typical Rent Increase Ranges:

• 2-5%: Standard annual increase matching inflation/costs
• 5-8%: Moderate increase when market rates rising
• 8-10%: Significant increase in hot markets or after years with no increase
• 10%+: Risky—may drive good tenant to leave
• 0%: Strategic choice to retain excellent tenant when slightly below market

Rent Control & Legal Limits on Increases

Many jurisdictions limit how much you can increase rent. Always check local laws before sending renewal notice:

States/Cities with Rent Control:

• California (Statewide AB 1482): 5% + local CPI, maximum 10% annually for properties 15+ years old (some cities have stricter local control)
• Oregon (Statewide): 7% + CPI annually
• New York City: Rent Stabilization Board sets annual allowable increases (typically 2-4%)
• San Francisco: Annual allowable increase set by Rent Board (typically 1-3%)
• Los Angeles: 3-8% depending on unit type and CPI
• Washington D.C.: CPI + 2%, maximum
• Several other cities: Seattle, Portland, Oakland, Berkeley, Santa Monica, West Hollywood, and more

Penalties for illegal increases: Landlords who exceed legal limits can face fines, lawsuits, rent rollbacks, and paying tenant attorney fees. Always verify limits before raising rent.

Fixed Term vs. Month-to-Month Renewal

Fixed Term Renewal (e.g., Another 1-Year Lease):

Advantages:

• Guaranteed income for specified period
• Tenant cannot leave early without penalty
• Rent locked in—no mid-lease surprises
• Planning certainty for both parties

Disadvantages: Cannot raise rent during term, cannot remove problem tenant easily without cause

Month-to-Month Renewal:

Advantages:

• Flexibility to sell property or move in family
• Can raise rent with proper notice (30-60 days typically)
• Easier to remove problem tenant (just give notice)
• Good for tenants who may need to relocate

Disadvantages: Tenant can leave with short notice, less income certainty, higher turnover risk

What to Include in Renewal Agreement

Essential Elements:

1. Reference to original lease: Date of original lease and parties involved
2. Renewal period: New start and end dates (or month-to-month)
3. New rent amount: Updated monthly rent and due date
4. Security deposit: Any changes to deposit amount
5. Modified terms: Any changes to original lease provisions
6. Incorporation clause: “All other terms remain in effect”
7. Signatures: Landlord and all tenants must sign
8. Date: When agreement is executed

Common Mistakes to Avoid

❌ Waiting Too Long to Offer Renewal

Don’t wait until 2 weeks before lease ends. Good tenants receive multiple offers in competitive markets. Offer renewal 60-90 days out to avoid losing tenant to another landlord.

❌ Excessive Rent Increases

Raising rent 20-30% may seem profitable but often backfires. Good tenant leaves, you face $5,000 turnover costs, and next tenant may be problematic. Moderate increases (3-8%) keep tenants happy while increasing income.

❌ Not Documenting Changes

Verbal agreements don’t hold up in court. If you allow a pet or change parking arrangements at renewal, document it in writing in the renewal agreement.

❌ Auto-Converting to Month-to-Month

Many leases automatically convert to month-to-month if not renewed. While this provides flexibility, it also means tenant can leave with 30 days notice. Proactively offer fixed-term renewal if you want stability.

Negotiating Renewal Terms

If Tenant Resists Rent Increase:

• Show comparable market rates: Demonstrate increase is below market
• Highlight improvements: New appliances, landscaping, repairs you’ve made
• Offer compromise: Meet halfway on increase amount
• Phase increase: Smaller increase now, another in 6 months
• Add value: Include garage, storage, or amenity access
• Longer term: 2-year lease at higher rate vs. 1-year at lower rate

If You Want to NOT Renew:

If tenant is problematic and you don’t want renewal:

• Check state law—some require “just cause” for non-renewal
• Give proper advance notice (typically 30-60 days)
• Document reasons (lease violations, chronic issues)
• Send formal non-renewal notice in writing
• Be prepared for tenant to stay month-to-month if lease converts automatically

After Signing Renewal Agreement

Follow-Up Steps:

1. Provide tenant with signed copy of renewal agreement
2. File original in tenant records
3. Update rent amount in accounting system
4. If deposit increased, collect additional funds before renewal start
5. Complete any agreed-upon repairs or improvements
6. Set calendar reminder for next renewal date (60-90 days before end)

Related Forms

• Property Inspection Checklist – Inspect before renewal decision
• Notice to Vacate – If not renewing lease
• Rent Increase Notice – For month-to-month tenancies

This form is for informational purposes. Consult a licensed attorney for legal advice.