If your lease term is coming to an end, you may be wondering if it makes sense to renew your lease. Lease renewals are a great option if you trust your landlord, are content in your apartment, and want the stability of staying put for an entire year.
But before renewing your lease, you should consider whether your current rental is compatible with your lifestyle and how your life might change over the next year.
Below, we’ll go over how to decide whether it’s worth it to renew your lease and offer additional options for when a renewal doesn’t make sense.
Renewing vs. extending vs. month-to-month leases
If you wish to stay in your current apartment after your lease ends, you will be faced with three options: renewing your lease, extending it, or switching to a month-to-month lease. While the endgame of each of these arrangements is the same, there are significant differences between them, and the option that is best for you will depend on your long-term plans.
A lease extension means that you add time to your existing lease. The terms of your lease, including the cost of rent, remain the same; you simply move the expiry date of your lease forward. It’s up to you and your landlord to agree on the length of the lease extension, but typically they are just a few months long. Anything longer than that would likely require a lease renewal, but it depends on your landlord. A lease extension is a fantastic option if you think you’d like to move soon or want to buy yourself some additional time to decide.
Many landlords will offer the option to switch to a month-to-month rental agreement after your initial lease ends. This type of lease agreement provides the most flexibility, but it also gives the landlord freedom to increase your rent, change the terms, or terminate the lease every 30 days. Though it’s unlikely that a landlord would hike the rent every month, it’s wise to be aware of the possibility.
Month-to-month leases are a great option if you’re planning to move in the short term but aren’t exactly sure when. For instance, if you’re in the process of buying a home, a month-to-month lease affords you the flexibility to move out as soon as you close without paying a penalty to break your lease.
Renewing a lease
Renewing a lease means signing on for another full lease term (usually a year). The terms of your new lease will likely remain identical to the first one, but there is a chance your landlord could change them. For instance, if rents have increased significantly in your area, your landlord might increase yours under the new lease terms. However, if you have a good relationship with your landlord, you may be in a position to renegotiate the terms of your lease to be more favorable.
What to consider before renewing your lease
Renewing your lease is a long-term commitment, so it’s essential to consider all the pros and cons before signing. If your current rental meets your needs, renewing your lease probably makes sense. Since breaking a lease can be so costly, it may not make sense to renew if there are potential life changes on the horizon or aspects of your living arrangement that you hope to change.
Considering the following points will help you determine whether it makes sense to renew your lease or opt for a different arrangement.
Does your apartment still fit your lifestyle?
Think carefully about whether or not your apartment still fits your lifestyle. Do you have sufficient space? Does the building offer amenities that you appreciate, or is there something more you wish you had, such as on-site laundry or a fitness center? Alternatively, are you paying an inflated rent price for a building with amenities you rarely use?
Create a pro and con list with everything you like and dislike about your current apartment. Then, spend some time perusing rental listings in your price range. This will help you determine whether there’s a possibility of finding something even better, or it may become apparent that you’ve got a great deal and should stay put!
Also consider whether your apartment’s location is ideal. Do you like your neighborhood? Is your commute manageable? If you’ve changed jobs since moving into this apartment, does the area still work well? Where are your friends based? If you’re traveling long distances to your job, your social obligations, or both, moving might enable you to reduce the time you spend commuting each week.
What are your plans for the next year?
Your apartment might be meeting your needs now, but a lot can change over a year. Before you sign on to renew your lease for another 12 months, think through what you have on the horizon.
Are you working toward any significant life changes that might not be compatible with your current apartment? Perhaps you’re facing the possibility of moving to a new city, working toward buying a house, contemplating moving in with your significant other, or expanding your family.
If a major life change happens within the next year, it could require breaking your lease. In this case, a month-to-month agreement or a lease extension would offer you more flexibility and save you the expenses that come with breaking your lease.
Is the price increase really worth it?
Because a lease renewal is actually just a brand new lease agreement, they are legally subject to rent increases. The amount of the increase depends on where you live. If you live in an area, the market rate for rentals may have increased significantly over the past year since you signed your original lease agreement. You must ask yourself whether you’re willing (or able) to cover the rent increase.
In some cases, you may be able to find a less expensive apartment by downsizing or switching neighborhoods. But, it’s also possible that rents have increased throughout your city. If you anticipate that prices will continue to rise, renewing your lease will insulate you from significant rent increases for the next 12 months.
Renegotiate the terms of your lease
Before signing on to renew your lease, review the terms carefully. Is there anything you wish you could change? This is an excellent opportunity to renegotiate.
Remember, if you’ve been a respectful tenant and have always paid your rent on time, you have more bargaining power than you may realize. Renewing your lease is ideal for your landlord because they will not have to spend time marketing your vacant unit and vetting new tenants. They will likely be willing to accommodate your requests (within reason) if it means you’ll renew the lease.
You could negotiate anything from the rent price to items like pet rent, parking fees, or even the utilities included with your unit. Even if the market rent prices have increased in your area, you may be able to convince your landlord to continue renting to you at your current rate. It never hurts to try– don’t underestimate the value of being a great tenant!
The Bottom Line
Ultimately, if you’re happy with your landlord and content with your rental, renewing your lease offers stability. You won’t face major hikes, and you may even be able to negotiate more favorable terms, which could ultimately save you money.
However, if you’re planning to make major lifestyle changes such as expanding your family or purchasing your first home, you might benefit from the flexibility of a lease extension or a month-to-month rental agreement. If you’re not sure what’s best, talk it over with your landlord. You might be surprised how willing they will be to accommodate such a good tenant!