Lease renewals can provide rental owners with an opportunity to retain tenants. That’s a big part of profitability and ROI. You want to get it right, because if you can successfully renew a lease, you can easily avoid vacancy loss and turnover costs.
Managing these renewals requires knowledge, specifically of rent control regulations. It also requires diplomacy, good negotiating skills, and a willingness to deliver what tenants want and need in order to continue enjoying their rental experience.
If you’re a Temple City landlord approaching a lease renewal, these tips and strategies can help.
Communicate Early About Renewal Terms
Timing is critical when it comes to lease renewals. Start the conversation early, ideally 90 days before the lease is set to expire. This gives your tenants enough time to evaluate whether they wish to stay or move on. By approaching your tenant well in advance, you demonstrate professionalism and a respect for what will either be a continuing relationship or a smooth transition.
When discussing lease terms, be transparent about any proposed rental increases and the reasons behind them. A clear and open conversation can reduce conflict and lead to a positive outcome for everyone. Most tenants expect that the rent will go up; things get difficult when the increase is outrageously high or misaligned with the market.
Rental Increases and Rent Control Laws in Temple City
California is serious about tenant protection laws, and statewide rent control has now been in place for years. If you’re renting out a multi-family property that’s at least 15 years old, you are probably required to follow the rent control laws, which limit rental increases. Los Angeles County has its own laws and regulations that may add additional restrictions.
It begins with knowing whether you’re covered by or excluded from rent control laws. You’ll want your lease to reflect that, so renewal time is a good opportunity to review lease agreements for compliance.
When to Renegotiate the Lease
Do you want to keep the new lease similar to what you already have in place or are there some terms that need to be renegotiated?
This depends on your property, your tenants, and the elements of your existing lease.
Sometimes, the original lease terms may need to be adjusted based on changes in market conditions or the property’s needs. This might include
- Longer Lease Terms. If your tenant has been with you for a while and is reliable, you may want to offer a longer-term lease (maybe two years instead of one) to provide stability. You can offer a renewal rate that’s a bit lower for those tenants willing to commit to a longer renewal period.
- Changes in Use or Policy. If you’re considering changes to the property (such as a new pet policy or restrictions on parking), these should be communicated clearly and fairly, with adequate time for discussion.
Listen to any tenant requests as well. Do they want a new microwave before they agree to a renewal? Consider it. Are they asking for fresh paint? That can probably be provided.
Managing lease renewals in Temple City requires a balanced approach of compliance and negotiation. For some owners, keeping great tenants in place is easy. In more competitive markets, holding onto those residents requires more of an effort.
Let’s talk about how we can help with lease renewals as your Temple City property management experts. Please contact us at ZenPro Property Management.
