Advice and Opinion

What happens if a tenant reneges on lease renewal

What happens in a case where a tenant’s lease for the year has expired, and in the original contract it stated that he had an option to renew the lease for a further year – with a negotiated increase – but after saying that he was renewing then decided to cancel it after a couple of months instead?

Michael Bauer, managing director of IHPC estate agents, says that this does happen from time to time and any communication going back and forth between the landlord and tenant should be put into writing. Even if the confirmation of the agreement is via email, that is still legal and binding, he said.

If the tenant said he would renew his lease, this is seen to be a contract as there was an offer and an acceptance of the offer. Therefore, even though the tenant might have changed his mind he is still, in effect, held by the agreement via email or telephone to stay on for an additional year.

The fact that they may not have signed an official lease agreement document does not make the agreement any less valid, said Bauer.

By agreeing to extend the lease initially, a valid extension to the lease has resulted and the landlord had accepted that he was staying on and made his plans accordingly.

The tenant will have, if he still wants to cancel, to pay a reasonable cancellation fee (which is usually a month’s rent because that is how long it would take to find another tenant in normal circumstances) and give 20 business days’ notice to the landlord, said Bauer.

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