How to Handle Lease Renewals and Negotiations: A Landlord's Complete Playbook (2026)

By PropsManager Team · Leasing & Marketing · Feb 26, 2026

Lease renewal time is one of the most important moments in your relationship with a tenant — and one of the most profitable opportunities you have as a landlord. A well-handled renewal retains a good tenant (saving you thousands in turnover costs), adjusts your rent to market rate (protecting your income), and strengthens the landlord-tenant relationship for another term.

A poorly handled renewal does the opposite: loses a good tenant over a small disagreement, leaves money on the table, or creates conflict that sours the remainder of the tenancy.

According to the National Apartment Association, the average cost of tenant turnover is $1,000 to $5,000 per unit when you factor in vacancy loss, marketing costs, cleaning, repairs, and administrative time. Compare that to the cost of a well-crafted renewal negotiation — essentially zero — and the business case for getting renewals right is overwhelming.

This guide covers the complete renewal process: timing, preparation, rent increase strategy, negotiation techniques, lease term options, and what to do when a tenant decides to leave.

The Strategic Importance of Lease Renewals

Why Renewals Matter More Than New Leases

Every time a tenant leaves, you incur a cascade of costs:

A tenant who renews their lease for another year saves you all of these costs. Even if you could charge a new tenant slightly more in rent, the turnover costs usually outweigh the difference.

The Retention Mindset

The best landlords think of renewals not as administrative events but as retention opportunities. Your goal is to keep good tenants as long as possible while gradually bringing rent to market rate.

A tenant who stays 5 years at gradually increasing rent is far more valuable than a revolving door of tenants who each stay 12 months at slightly higher rates.

Step 1: Timing — When to Start the Renewal Process

The 90-Day Rule

Contact your tenant at least 90 days before their lease expires. This timing gives both parties enough room to negotiate, make decisions, and plan logistics without pressure.

Why 90 days?

• It signals professionalism and respect for the tenant's planning needs
• It gives you time to find a replacement if the tenant decides to leave
• It avoids last-minute scrambles that often lead to unfavorable terms
• Many states require a minimum notice period (30–60 days) for lease termination — starting at 90 gives you buffer

The Communication Timeline

Using PropsManager to track lease expiration dates ensures you never miss a renewal window. Automated reminders can trigger your outreach at exactly the right time.

The Initial Renewal Offer

Your first communication should be warm, professional, and clear. Here is a structure that works:

Dear [Tenant Name],

Your current lease for [Address] expires on [Date]. We have valued having you as a tenant and would love for you to stay.

We are offering the following renewal options:

• 12-month lease at $X/month
• 18-month lease at $X/month
• Month-to-month at $X/month

Please review and let us know your preference by [Date — 45 days before expiration]. If you have any questions or would like to discuss the terms, we are happy to connect.

Thank you for being a great tenant.

Step 2: Setting the Renewal Rent — Data-Driven Pricing

Research Current Market Rates

Before offering renewal terms, run a fresh comparable market analysis — the same process you would use when setting rent for a new listing.

Look at:

• What similar units in your area are currently renting for
• Whether the market has moved up or down since the original lease was signed
• Any new supply (new apartment buildings, developments) that might affect pricing
• Seasonal factors (renewing during peak season gives you more pricing power)

Calculating the Right Increase

Annual rent increases should generally fall in the 2–5% range in stable markets. Here is a framework:

Below-market rent (current rent is 10%+ below comps): Consider a larger increase (5–8%), but be prepared to justify it with market data. Phasing in over 2 renewals is often more palatable than a single large jump.

At-market rent (current rent is within 5% of comps): A standard 3–5% increase maintains pace with inflation and market movement.

Above-market rent (current rent exceeds comps): Holding rent flat or offering a minimal increase (1–2%) improves retention and reduces the risk of losing a good tenant to a cheaper competitor.

The Retention Premium

A good tenant has quantifiable value beyond what they pay in rent:

• They take care of the property (saving you maintenance costs)
• They pay on time (saving you collection effort and late fee awkwardness)
• They do not generate complaints or legal issues
• They do not require turnover costs

This "retention premium" means a 3% rent increase that keeps a great tenant is often worth more than a 7% increase that drives them to find a cheaper unit — because finding and placing a new tenant costs you 1–2 months of rent anyway.

Rent Control Considerations

If your property is subject to rent control or stabilization laws, your annual increase is capped by statute. Common caps range from 3% to 10% annually, and some jurisdictions tie the maximum increase to the Consumer Price Index (CPI). Know your local rules before proposing any increase.

Step 3: Structuring the Renewal Offer

Lease Term Options

Offering multiple lease term options gives the tenant flexibility and often results in a faster decision:

12-month renewal (standard) The most common renewal term. Provides stability for both parties and is the baseline for rent pricing.

18-month or 24-month renewal Longer terms reduce turnover frequency and provide income certainty. Offer a slight discount ($25–$50/month) as an incentive. A tenant locked in for 24 months at $1,475 is more valuable than one at $1,500 who might leave after 12.

Month-to-month conversion If the tenant is unsure about their long-term plans, offer a month-to-month option at a premium ($50–$150/month above the annual rate). This gives them flexibility while compensating you for the uncertainty and reduced notice period.

Additional Terms to Consider at Renewal

Renewal time is also an opportunity to update lease terms:

• Pet policy changes — if you have started allowing pets, or need to add pet rent
• Maintenance responsibilities — clarifying who handles lawn care, snow removal, etc.
• Utility arrangements — switching utility responsibilities if needed
• Late fee updates — adjusting late fee amounts if they have proven insufficient
• Technology updates — requiring online rent payment through automated collection if not already in place
• Lease addenda — adding clauses for smoking policy, renter's insurance requirements, or other updates

Step 4: The Negotiation

Most good tenants will either accept your offer or come back with a counter-proposal. How you handle the negotiation determines whether you retain the tenant and at what terms.

Tenant Counter-Offers: How to Respond

"The increase is too high." Share your market data. "I understand the concern. Here's what comparable units in the area are renting for — [provide 3–5 examples]. Our increase brings you to [still below / right at / slightly above] market rate."

"I found a cheaper place." Ask for specifics. Often, cheaper listings are smaller, in worse condition, or in less desirable locations. You can also point out the costs of moving: security deposit, application fees, movers, utility transfers, and the hassle factor. If the alternative is genuinely comparable and cheaper, you may need to match or negotiate.

"Can you fix [issue] instead of lowering the rent?" This is a productive negotiation. If a tenant asks for a $2,000 kitchen upgrade in exchange for signing a 2-year lease at your proposed rent, that may be an excellent deal — you improve the property's value while retaining a good tenant.

"Can you hold the rent flat?" If the tenant is outstanding (never late, no complaints, takes care of the property), a flat renewal may be worth it — especially if the alternative is a costly turnover. Calculate what you would spend on vacancy and turnover, and compare it to the lost income from not increasing rent.

Negotiation Principles

1. Always negotiate in writing — email or through your property management platform. This creates a record and avoids misunderstandings.

2. Be willing to meet in the middle — a $25/month compromise costs you $300/year but can save a tenancy worth thousands.

3. Trade, don't just concede — if you lower the increase, ask for something in return: a longer lease term, autopay enrollment, or agreement to a previously contested lease term.

4. Know your walk-away number — determine the minimum rent increase that is acceptable before the negotiation begins. If the tenant cannot meet it, you need to be prepared to let them go.

5. Never negotiate against yourself — present your offer, let the tenant respond, then adjust. Do not keep lowering the price before they have even objected.

When the Tenant Says No

If the tenant decides not to renew:

1. Get it in writing immediately — a text or email confirmation of their move-out date
2. Confirm the move-out process — cleaning expectations, key return, move-out inspection scheduling
3. Start marketing the unit — list it as "available [date]" on rental platforms
4. Begin showing the unit — coordinate showings with the current tenant (provide proper notice per your state law)
5. Review the security deposit process — ensure you are ready for the move-out inspection and timely deposit return

Step 5: Executing the Renewal

The New Lease Document

Depending on your practice, you will either:

• Issue a lease renewal amendment — a shorter document that extends the term and updates specific clauses (rent amount, dates) while referencing the original lease
• Issue a completely new lease — the safer option, as it ensures the tenant has signed current terms with any policy updates

For most landlords, a new lease is recommended at each renewal. It eliminates ambiguity about which terms apply and ensures the document reflects your current policies.

Digital Lease Signing

Use digital lease agreements for renewal signatures. They are faster, legally enforceable, and create an automatic record. Most tenants prefer signing digitally — and it eliminates the scheduling hassle of meeting in person.

What If the Lease Expires Before Renewal Is Signed?

If the lease expires and neither party has taken action, the tenancy typically converts to a month-to-month arrangement under the same terms as the expired lease (in most states). This is not ideal — month-to-month gives both parties less stability — but it is not a crisis. Continue the renewal discussion and execute the new lease as soon as possible.

Managing Rent Increases Over Time

The Annual Increase Strategy

Consistent, modest annual increases are far more effective and less disruptive than large, infrequent ones:

The math is similar, but the tenant experience is completely different. A $45/month increase at $1,500 rent (3%) is barely noticeable. A $225/month increase after 3 years of flat rent (15%) feels punishing — even though it reaches the same endpoint.

Communicating Increases Effectively

• Lead with appreciation — "We've valued having you as a tenant and hope you'll stay."
• Provide context — "Market rents in this area have increased by X% this year."
• Be specific — state the exact new amount and effective date
• Offer options — longer lease = lower increase; month-to-month = higher rate
• Be available — invite questions or discussion rather than issuing a take-it-or-leave-it demand

Common Renewal Mistakes

Waiting Until the Last Minute

Contacting a tenant 2 weeks before lease expiration puts pressure on both parties and often results in worse outcomes — either the tenant leaves because they did not have time to plan, or you cave on terms because you cannot afford vacancy.

Not Researching Market Rates

Raising rent by an arbitrary percentage without checking comps means you are either overcharging (risking tenant loss) or undercharging (losing revenue). Always base increases on data.

Treating All Tenants the Same

A tenant who has been perfect for 3 years and a tenant who has been chronically late and generated multiple complaints should not receive the same renewal terms. Differentiate your approach based on tenant quality — offer better terms to retain your best tenants.

Forgetting to Update Lease Terms

Renewal time is your opportunity to fix problems in the original lease. If you realized during the tenancy that your pet policy, maintenance responsibilities, or late fee structure needs updating, build those changes into the renewal lease.

Not Having a Plan B

Always begin marketing preparation before the renewal deadline. If the tenant declines, you want to be ready to list the unit immediately — not scrambling to take photos and write a listing description.

Explore More PropsManager Resources

Looking for the right property management software? Check out our in-depth guides:

• Compare Property Management Software — See how PropsManager stacks up against Buildium, AppFolio, Rent Manager, and Propertyware.
• Software for Small Landlords — Built for landlords managing 1–50 units without the enterprise price tag.
• AI-Powered Property Management — Discover how automation can save you 5–10 hours per week.
• Solutions for Property Managers — Scale from 50 to 500+ units without scaling your costs.

Frequently Asked Questions

How much notice do I need to give for a rent increase?

This varies by state and lease type. For fixed-term leases, the increase takes effect at renewal — you cannot raise rent mid-lease. For month-to-month tenancies, most states require 30 days' notice for a rent increase, though some (like California for increases above 10%) require 90 days. Check your state law.

Can a tenant negotiate the rent increase?

Absolutely. Lease renewals are a two-party negotiation. A tenant who proposes a counter-offer is engaging constructively — listen, evaluate, and be prepared to find middle ground if the tenant is worth keeping.

What if I want the tenant to leave instead of renewing?

If you have a legitimate reason for not renewing (owner move-in, major renovation, or simply wanting a fresh start), provide the required notice per your state law. In most states for month-to-month tenancies, 30–60 days' written notice is required. For fixed-term leases, you generally must wait until the lease expires and provide notice of non-renewal within the required timeframe. Do not refuse to renew for discriminatory reasons — that violates fair housing laws.

Should I offer a renewal discount for longer lease terms?

Yes, in most cases. A $25–$50/month discount for an 18- or 24-month lease saves you significantly more in avoided turnover costs than the small monthly discount costs. A 24-month lease at $1,475/month saves you $1,950 in vacancy and turnover costs compared to two 12-month leases at $1,500 with a turnover in between.

What if a tenant wants to switch from a lease to month-to-month?

Allow it, but at a premium. Month-to-month arrangements give the tenant flexibility to leave with minimal notice, which increases your vacancy risk. A premium of $50–$150/month above the annual lease rate compensates for this uncertainty.

How do I handle renewals for multiple properties efficiently?

Tracking renewal dates, market comps, and tenant communication across multiple properties manually is error-prone and time-consuming. Property management software like PropsManager centralizes lease tracking, sends automated reminders, and stores all renewal correspondence in one place.

Conclusion

Lease renewals are where tenant retention and revenue optimization intersect. Getting them right means starting early, basing rent increases on market data, offering flexible terms, negotiating professionally, and knowing when to compromise to keep a good tenant.

The landlords who master renewals have lower turnover, higher lifetime tenant value, and more predictable income. It is one of the simplest ways to improve the profitability of your rental business without buying another property.

Ready to streamline your renewal process? Request a demo of PropsManager and see how automated lease tracking, renewal reminders, and digital lease signing make renewals effortless across your entire portfolio.