When renting out a property, it is normal to renew the lease with an existing tenant.
Lease renewal helps continue your relationship with a tenant who has been regular with rent payments and has taken good care of your property. After all, leasing your property to a known person is always preferable to risking it with a new tenant.
Let us understand what the lease renewal process is and how you can go about it.
What is Lease Renewal?
Lease renewal is a process that extends your lease with an existing tenant beyond the time mentioned in the original lease document.
The new lease may have some minor changes, like the lease duration and the rental amount. You can discuss these terms with the tenant before you get the renewal of lease agreement letter made.
Why is it Important to Streamline Your Lease Renewal Process?
Streamlining your lease renewal process or defining the steps to renew a lease is essential to protect your interests.
For instance, even though your tenant has been regular with rent payments, you may still want to inspect your house before thinking about renewing.
Secondly, you may want to fix the rent increase and avoid confusion or discussions. Several landlords fix the rent increase to 10% so that they don’t have to go into a round of negotiations with tenants before the lease renewal process. Having a commercial lease renewal process is equally important to ensure everyone is on the same page.
How to Renew a Lease?
The first step in renewing your property is to have a discussion with your tenant, put forward a lease renewal offer and finalise the terms of the lease renewal letter.
Ideally, you may want to initiate this conversation two months before the end of your ongoing lease. It will ensure you are not caught off guard in case the tenant does not want to continue to live on your property.
Once you have discussed and finalised the terms, like the rent and tenure of your lease, the next step is to draft your lease renewal agreement. It is advisable to use the expertise of a legal team to help with this legal document.
How to Make the Lease Renewal Process Easier?
Making the lease renewal process easier is all about making the lives of your tenants more comfortable on your property.
For instance, make sure that you respond to maintenance issues quickly. It will leave a good impression on the tenants as they don’t have to follow up for repairs constantly.
Secondly, make it easier for them to pay rent by giving them an option of transferring the funds online. Finally, be proactive and initiate discussions about renewal in advance to give your tenants time to think about it.
Things to Keep in Mind While Renewing the Lease
You may want to remember that lease renewal does not always work. Your tenant may have their own reasons, like a job change or lifestyle change, because of which they may not want to continue renting your property.
Secondly, it is recommended to fix a suitable date in advance so that the tenant is not on your property without a valid lease.
Conclusion
Finding a tenant who values your property, pays rent on time, and is cordial is challenging. When you find one, you may want to continue leasing out to them.
A lease renewal process helps in extending your lease easily and smoothly. With the information shared above, you can now go about it in an orderly fashion and avoid any hassles.
About
OHI is a fifteen-year-old real estate services company working with 50+ commercial and residential real estate developers, funds and property management companies across USA. Our deep expertise in real estate accounting, financial analysis, lease abstraction, administration and asset management has helped clients cut associated costs by 40-50%. We currently provide these services to a portfolio of 50000 units across clients.
