Lease Renewal vs. Lease Extension
As the end of your lease approaches, you may find yourself at a crossroads: should I extend my lease temporarily or renew it? While both lease extensions and lease renewals allow tenants to stay in their current place of residence, the details embedded in each agreement are drastically different. In this blog, we’ll explain the differences between the two agreements and help you determine the best solution for you.
What is a Lease Extension?
A lease extension is an agreement made between a landlord and their tenant that allows them to extend the conditions of their contract for a short period of time. This means that the terms and conditions stated in the original lease agreement – such as the price of rent and included amenities – are upheld and a lease amendment is added, stating that this agreement extends past the expiry date. Lease extensions are commonly used at the end of a rental period when the resident may still be searching for a new place to live or the property manager has yet to find a prospective tenant. The length of an extension can range from one month to a few months, with most lasting no more than a year. Lease extensions are short-term solutions that provide minimal housing security and no opportunities to increase rent but allow for consistency since no changes are made to the agreement.
What is a Lease Renewal?
A lease renewal is when a property manager and a tenant renegotiate a new lease agreement when the current one is about to expire. Discussions for renewals usually begin at least 60-90 days before the original contract's expiry date. If a resident does not hear anything around this time, they can ask the landlord about it directly. Lease renewals are contractual agreements where changes can be made from the original agreement. These include an increase in rent, adjustments to the duration of the tenant’s lease, modifications to rental conditions and much more. Renewals benefit tenants and landlords as they can keep their homes and income respectively without unnecessary expenses.
Extension or Renewal - Which is Best for You?
Whether you’re planning on moving, have found your forever home or are still unsure about your plans, there are multiple options to help you find the best solution that is suitable to your needs and lifestyle.
Both lease extensions and lease renewals require effective communication. Meetings must be held and records must be kept to avoid confusion in the future. Any changes must have written documentation highlighted and agreed upon by both parties. There are different rules for both instances, so make sure to check your local policies.
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