Lease renewal vs. re-contracting: paying the renewal fee and how the process works

Most lease contracts have a term of around two years, and as that term nears its end, the management company sends a renewal notice. The renewal fee itself — the amount and how to think about it — is covered in a separate article; here we’ll focus on the concrete flow of the renewal process and how it differs from the similar-sounding term “re-contracting.”

The general renewal process

Lease renewal starts with a notice that arrives from the management company a few months before your lease’s expiration date. This notice typically includes the new contract term, the renewal fee amount, and the payment deadline. By checking the details and preparing the required documents and payment by the deadline, you can continue living in the same room. Barring any major change in circumstances, the renewal process itself is generally not very complicated. Payment methods for the renewal fee — bank transfer, automatic withdrawal, and so on — vary by contract, so check carefully what method is specified in the notice.

How renewal and re-contracting differ

Renewal is the procedure for continuing your current contract as-is. Re-contracting, on the other hand, means ending the existing contract and signing a brand-new one. This form is sometimes used instead of renewal when the nature of the contract doesn’t allow for a simple renewal — for example, at the end of a fixed-term lease. Re-contracting can require resubmitting more documents, and going through screening again, more so than a renewal, so it’s important to check whether the procedure you’re being asked to complete is called a “renewal” or a “re-contract.”

What else typically gets handled alongside renewal

At renewal time, your fire insurance period and your guarantor company contract are also often renewed at the same time. These are separate contracts from the lease itself, but they’re frequently bundled into the renewal notice. Read the notice carefully so you don’t overlook the renewal fees for fire insurance or the guarantor company.

What to check once the renewal notice arrives

When the renewal notice arrives, first check the new contract term, the renewal fee amount, and the payment deadline. It’s also reassuring to confirm whether there are any changes to the rent or special provisions. If anything is unclear, it’s a good idea to contact the management company with plenty of time before the deadline. If there is a change to your contract terms, you’ll generally be notified of this in writing, so it’s worth reading through carefully for anything different from before.

If you decide not to renew

If you’re considering moving out at renewal time, you need to follow the notice period set out in your contract and tell the management company you intend to move out, as early as possible. Missing the notice window could mean paying rent for longer than expected, so it’s important to decide between renewing and moving out early.

FAQ

How far in advance should I prepare the renewal fee?

The renewal notice often arrives a few months before your lease’s expiration date, so once it arrives, check the amount and payment deadline and prepare accordingly.

Do renewal and re-contracting require different documents?

Re-contracting means signing a new contract, so it can require resubmitting more documents than a renewal. Check the details of the notice you receive.

What should I do if I decide to move out at renewal time?

If you’re not renewing, you need to follow the notice period set out in your contract and tell the management company you intend to move out as early as possible.

Summary

Renewal continues your existing contract, while re-contracting means signing a new one — an important distinction. When your renewal notice arrives, check the term, cost, and payment deadline, and also check on your fire insurance and guarantor company renewal. If you’re not renewing, it’s important to act early, keeping the notice period in mind.