When your lease is up, you might be wondering how much it will cost to renew. After all, you don’t want any nasty surprises when it comes time to sign on the dotted line. However, there’s no need to worry—renewing your lease is a fairly straightforward process, and in most cases, the fee is simply a percentage of your monthly rent.
What Is a Lease Renewal Fee?
A lease renewal fee is a charge that landlords often impose when tenants extend their leases. In most cases, the fee is equal to a percentage of the monthly rent, and it’s typically due at the time you sign the new lease agreement. For example, if your landlord charges a 5% renewal fee and your monthly rent is $1,000, you would owe a $50 renewal fee when you sign the new lease.
While renewal fees are fairly common, they’re not always charged. Some landlords waive the fee as a way to keep good tenants in their buildings. Others may charge a lower percentage for tenants who have been good stewards of the property (e.g., they haven’t caused any damage and they’ve always paid their rent on time).
The Purpose of Renewal Fees
Lease renewal fees serve two primary purposes:
- To offset the costs associated with re-renting an apartment after a tenant moves out
- To provide an incentive for tenants to stay in their current apartments
With respect to the first point, it can be expensive for landlords to turn over an apartment unit. They may need to repaint the walls, replace Carpeting or flooring, repairing any damage that was caused by the previous tenant, and so on. In some cases, landlords may also need to install new appliances or make other significant updates before they can re-rent an apartment. All of these costs can add up quickly, so it’s not uncommon for landlords to charge a lease renewal fee to help offset these expenses.
As for the second point, many landlords see lease renewals as an opportunity to increase rents—especially if the market rate for rents has gone up since the tenant originally signed their lease. By charging a renewal fee, landlords can raise rents without having to worry about tenants moving out because they can’t afford the higher monthly payments.
Tips for Negotiating Renewal Fees
If you’re not comfortable paying a renewal fee or if you think the amount your landlord is charging is too high, there are a few things you can do:
1) Shop around – If you’re unhappy with your current landlord’s policies (including renewal fees), start looking for another apartment. You may be able to find a better deal elsewhere.
2) Compare rates – If you like your current apartment and don’t want to move, see what other landlords in the area are charging for similar units. If your landlord’s fees are significantly higher than everyone else’s, that gives you some negotiating power.
3) Point out previous good behavior – As we mentioned earlier, some landlords waive renewal fees (or charge lower rates) for tenants who have been good stewards of their property. If that’s true in your case—e.g., you’ve never been late with rent and there’s no damage in your unit—be sure to mention it when negotiating with your landlord. They may be more likely to work with you if they know they won’t have any problems down the road.
4) Get it in writing – Once you come to an agreement with your landlord regarding the renewal fee (or any other issue), be sure to get everything in writing before signing off on it. This will help avoid any misunderstandings later on down the road.
Conclusion:
When it comes to renewing your lease, there are a few things you can expect in terms of fees. However, by reaching out to your landlord or property management company early on, you may be able to negotiate a lower rate. Keep in mind that market conditions and the condition of the property will affect the renewal fee, so be sure to do your research before beginning negotiations.
