Cons of Tenant Renewing Rental Lease

5 Negatives of a Tenant Renewing Lease

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 While you may think having a tenant renew his or her rental lease is your ultimate goal as a landlord, this is not always the case. There are times when it is better if a tenant leaves your rental than if they stay. Needy tenants and tenants who are paying below market rent are examples of tenants who you may not miss if they decided to live elsewhere. Here are five cons of having a tenant​ renew their lease agreement.

1. Can Only Increase Rent By So Much

Many states set rules on how much you can increase a current tenant’s rent by. Therefore, if you have a tenant who keeps renewing their lease year after year, they may be paying less than the current market rent for the apartment.

In this case, the fact that they keep renewing their lease can actually be hurting you financially. If the tenant moved, you would be able to chart a higher monthly rent for the unit and put more money in your pocket.

In order to increase a tenant’s rent, you also have to make sure you follow your state’s landlord tenant laws to do so. You will usually have to notify a tenant in writing before you can increase their rent. You also can only send this notice at certain times, such as 30 days before their lease is set to renew.

If the tenant is a good tenant who always pays their rent on time and never complains, you may be willing to accept less rent for fear of the unknown.

You do not know what to expect from a new tenant. They may stop paying their rent or may violate other terms of the lease.

2. May Have Wanted Tenant to Move

A second con of having a tenant renew their lease is that you may have actually wanted them to move. You may have a tenant who has not exactly broken any terms of their lease agreement but who has been a major nuisance.

They may complain constantly about their neighbors or may be incredibly demanding about minor maintenance issues.

As their lease renewal date approached, you have been hoping every day to receive the 30 days’ notice that they were moving. Since it is illegal to try and force a tenant out, as long as they are paying their rent and following the terms of their lease, you will just have to deal with them until they decide to move.

3. Tenant May Have Been Denied Elsewhere

Some tenants renew their lease because they have no other option. They know that they will not be approved to rent a new apartment due to some red flag that has occurred since they first signed a lease with you. This could be a job loss, a decline in their credit score, or even a criminal conviction.

Since landlords do not usually re-screen current tenants upon lease renewal, you will be completely unaware that this tenant could become a problem in the near future. Even if they have always paid their rent on time, due to a job loss or medical bills that put them in debt, they may soon begin paying their rent late, and then not at all. While you were initially happy that they renewed their lease, it has now become a nightmare as you battle in court to evict them.

Even if you are not going to go through your complete screening process every time a tenant renews a lease, it is a good idea to at least run their credit again. You can then compare this credit report to the report you received when the tenant first moved in. You will want to see if their credit score has noticeably declined or if they suddenly have a large amount of debt.

4. Neglect Maintenance

A forth con of having a current tenant renew their lease is that you might neglect performing routine maintenance on their apartment. If they had moved, you would have to make the property look sparkling new. You may have repainted, deep-cleaned carpets, repaired or replaced drafty windows, or replaced cracked floor or shower tiles.

Since the tenant is staying, if they do not specifically complain about an issue, you are more likely to push it off to a future date.

This could turn small issues, such as a few missing roof shingles, which could have easily been repaired, into big problems, such as an actual roof leak.

5. May Let Rules Slide

When you have a long-term tenant, you become more comfortable with them and you may begin to let the rules slide. For example, you may have charged a late fee at the beginning of their lease, but may have begun waiving that fee recently. Once you have bent the rules, it will be difficult to enforce these rules in the future.

It can be difficult, but you must maintain a professional landlord-tenant relationship with all tenants, regardless of how long they have been renting from you.