Let’s say you’re living in a new place that you absolutely love. Your landlord is nice, it’s in a great location, and it’s just the right size. But all good things must come to an end – including tenancy.
We have covered topics such as how to get your security deposit back, how much you should be spending on rent, and how to decide if you’re ready to buy vs. continuing to rent. Now, let’s cover what the difference is between a lease renewal and a lease extension – and which one may be a better bang for your buck as a renter.
A lease extension is a continuation of an existing lease. In a lease extension, a new lease is not drafted. Instead, an addendum is added on to the current lease, and the terms are negotiable, but it’s limited as to what can be changed. A great benefit of a lease extension is that you won’t need to re-pay fees that are associated with a new or renewed lease.
Simply put, a lease renewal is when you sign on for another full year with your existing lease.
If a landlord offers a tenant a lease renewal, the agreement is at the tenant's discretion. The tenant may choose not to renew the lease, but if so they must vacate the property in accordance with the expiring lease (usually around 30 days, or else the tenant faces eviction). And often they must provide a written notice. While it may sound contradictory, a lease renewal is not necessarily an automatic renewal of the original lease. Oftentimes (but not always), the current tenant will have to agree to new terms in the new lease. While theoretically a rental agreement should benefit the landlord and tenant, sometimes a lease might increase your rent or take away certain rent concessions from the first agreement. Upon getting a lease renewal offer, it’s always best to get a second pair of eyes on it if you can. Sometimes all of the legal mumbo-jumbo can prove arduous to absorb.
1. Don’t put all your eggs in one basket.
Real estate is ultimately about strategy. Think of your lease like a price match policy at Best Buy. If you want to build a case against paying a higher rent, or one as high as proposed in the new lease, look for similar-sized apartments offering a rental price that is the same or less than your rent amount. Having concrete examples of better deals at your disposal can really make a difference in your argument.
2. Remember, actions speak louder than words.
The landlord and tenant relationship is ultimately temporary, and subsequently it is inherently fragile. Like most things in life, it always helps to be charming. Your track record matters and can affect whether your landlord is willing to compromise with you – especially if a rent increase is on the table in your new lease agreement.
3. Talk to your neighbors. If you’re unsure about your lease renewal, it can be beneficial to chat with your neighbors and if possible, try and see their lease agreements to see if there are any differences. You may find that your neighbors are paying less in rent or find other concessions in their lease they were able to arrange with your landlord, such as having an extra utility bill paid for, new appliances, or allowing a tenant to renovate without losing their security deposit.
4. Bet high, but keep your expectations low. The fact is, landlords usually have more than one rental property and can usually find someone else to move in (unless the market is especially bad). Don’t let this dynamic deter you from negotiating a new agreement. Just have an alternative living plan if you don’t want to stay.
5. Know your rights. If you live in New York City, you may want to take a look at the Housing Stability & Tenant Protection ACT (HSTPA) of 2019. As outlined in HTSPA, landlords must inform tenants if they intend to raise the monthly rent by more than 5% and/or if they don’t intend to renew a lease. In both instances, the landlord must give you a mandatory 30-day expiration date. Be mindful that landlords are free to raise rent as much as they want. Granted, these rules change if you are in a rent stabilized property. If you’re outside of NYC, it may be wise to reach out to a Tenants Union in your state to be in the know about what landlords can and cannot put in their lease agreements.
In short, a lease renewal is a new lease agreement for another year (or sometimes more), while a lease extension is simply adding an addendum to your existing lease. A lease extension may not change or invalidate the terms of the current lease, whereas in a lease renewal new terms may be added more easily.
Are you a Rhino renter about to renew your lease? If you’re renewing your lease and don’t have any open claims or balances, your Rhino policy will renew automatically. As long as you’re in good standing, there’s no action required. You can also renew ahead of time and update any payment options should they have changed! If you decide you need to upgrade your home, you can use Rhino as security deposit insurance for your next rental to keep your wallet light and your bank account happy.