Is your tenant punctual in paying their rent, taking care of your property, and not causing you any trouble? If so, you’re probably enthusiastic about offering them the opportunity to renew their lease with you.
We don’t blame you for wanting to retain a first-rate tenant. It is not easy to find a tenant. You Market your rental, screen applicants, screen tenants, conduct property views, etc.
You can lower your turnover costs by renewing your lease with your current tenant and maintain a steady rental income stream. You also avoid the risk of getting a poor tenant.
In this article, we’ve compiled everything you need to know to navigate the lease renewal process in Canada. You’ll learn how government regulations treat lease renewals, how and when to present a renewal offer to your tenant, and how to encourage your tenant to accept your new lease agreement.
What happens to a fixed term lease in Canada? Fixed-term leases can be legally enforced with a clear beginning and end date. Once you and your tenant sign a lease agreement, you’re both bound by the terms and conditions of the contract. Fixed leases are usually for one year. However, they can be extended to six months, three months or forty days.
What happens to a fixed term lease? It renews automatically, or is it necessary to update the agreement? Do you allow your tenant to stay in the rental?
These questions will depend on the location of your rental property in Canada.
In a province like Alberta, once a fixed-term lease expires, the tenancy automatically ends, and the tenant must move out if they haven’t arranged a new lease with the landlord. The landlord does not have to permit the tenant to stay in the property. They also do not need to give them notice to leave. In other words, the lease agreement doesn’t automatically renew – it ends on the specific end date outlined in the document. To After the expiration of the current term, both the landlord and tenant must sign a new lease agreement to restore the lease.
The rules are different in British Columbia and Ontario. A fixed-term lease automatically ends and becomes a month to month tenancy if the landlord or tenant does not sign a new agreement. This arrangement can continue indefinitely, until either the landlord or tenant decides to end it.
Lease renewals in Quebec are similar to those in Ontario, BC and other provinces. A fixed-term lease can be renewed immediately after it expires without notice to the tenant or landlord. The lease will continue as a month to month contract, but for the same length as the expiring lease. If the previous fixed lease was longer than 12 months, this exception will apply. In such cases, the new lease can be renewed for a maximum 12 month period.
What are the steps for offering a lease renewal to your tenant?Preparing a lease renewal offer for your tenant is straightforward and doesn’t involve much paperwork. To maximize your chances of your tenant staying rather than moving out, there are some best practices you can follow.
If there’s one tip you need to heed, it’s this: inform your tenant about your intention to renew the lease at least three months before the current lease ends. Your tenant will have enough time to read your renewal offer and decide whether they want to accept or reject it. If they decide to move out before the end of their current term, it will give you a headstart in finding a replacement tenant.
Let’s say you delay in presenting your tenant with your lease renewal. Then, they cancel. You risk your rental being vacant for several months while you look for a new tenant. Rent income is lost if you don’t have a tenant. This can lead to a loss of rental income that will affect your profit at year end. You You can reduce this risk by being proactive, notifying your tenant as soon as possible about their renewal options.
Step 1: Identify the terms of your lease agreement
It’s perfectly acceptable not to make a single modification to your existing lease agreement’s terms. You might want to look at them and make any changes you feel necessary. Your updated lease will reflect your preferences and be more compatible with the needs of your tenant.
For example, you may incorporate a policy that requires your tenant to acquire tenant insurance if they don’t already possess it. To increase your rental’s appeal, you could make it pet-friendly. Many renters already have pets.
A rent price hike is another important consideration. Research local rent prices to find out how much you should be charging.
Rent increases are governed by the laws of each province or territory. These laws dictate:
How often you’re allowed to raise your rent
Maximum rent you can increase each month
What notice should you give to your tenant about a rent hike?
To learn more about the rules in your territory or province, check out our Rent Increase Guidelines Report.
Step 2 Notify your tenant regarding the upcoming lease renewal
Once you’ve settled on your lease terms, the next step is to send a letter advising your tenant of the forthcoming lease renewal. These are some details you should include in your letter:
End date for the current lease
The new lease term proposal
Key terms can be modified
Rent price for the next month, if applicable
The date of the letter’s sending
The date that you would like to receive a reply from the tenant
Contact information
As mentioned, it’s wise to provide your tenant with this notice at least 90 days before the current lease expires.
Step 3: You and your tenant negotiate the lease terms
There’s a chance your tenant may disapprove of your updated lease agreement’s terms. If that’s the case, arrange with them to discuss their concerns and answer any questions they may have. Ask them what lease features they don’t like and what changes you can make that’ll motivate them to stay on as your tenant.
Step 4: Create the lease agreement
The next step is to put the lease into writing. It’s prudent to document the updated terms in a brand-new lease agreement, even if you’ve only made minor alterations.
A court may consider a verbal lease valid depending on where you reside. Still, it’s better always to utilize a written lease as it serves as robust evidence should a dispute arise.
Drafting a new lease agreement should cover all aspects required by law in your area.
Step 5: Sign your lease agreement
Your tenant and you will sign the new lease. Send the lease agreement for your tenant’s review and approval. After your tenant signs the lease agreement, sign it and give them a copy. That’s it – you can now file away the lease agreement and not look at it again until its expiration date approaches.
