When the end date of a lease approaches, the big question arises: should I renew with the current tenant, or is it better to look for a new one? To make this decision, you need to consider financial factors, the tenant’s reliability, the state of the rental market, and even your personal plans for the property. In this guide, we review several key points that every property owner should take into account when deciding whether renewing the lease is the right choice.

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Tenant history and trust

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The first step in deciding whether to renew the lease is to assess the quality of your current tenant. Asking yourself questions such as whether they’ve paid rent on time, taken good care of the property, and followed the terms of the lease can help you gain a clearer perspective. A good tenant who fulfills their obligations is a valuable asset and can provide great stability for the property owner.

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Today, rental delinquency is a real risk: it's estimated that around 8% of tenants experience payment delays or defaults, although only a small percentage accumulate serious debt. These situations can lead to significant losses, sometimes amounting to several months' worth of rent. If your tenant has proven to be responsible and communicative, keeping them may save you future problems. But if there have been frequent issues, it might be a good time to consider a change.

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Costs involved in changing tenants

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Renewing with a good tenant can be a very profitable decision when you consider the opportunity cost of losing them. Every time a rental property is left vacant, the landlord typically incurs several expenses such as repairs, deep cleaning, advertising, and sometimes commission fees if an agency is used. In addition, there is the time without rental income, which directly affects the property's profitability.

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In many cases, changing tenants can mean losing one or more months of rent due to expenses and vacancy periods. Moreover, finding the right person takes time, involves multiple visits and paperwork, and carries a certain level of uncertainty. Renewing with a tenant who has already proven to be trustworthy can help you avoid these costs and headaches, ensuring a steady and secure income stream.

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Rental market conditions and vacancy rates

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The state of the rental market in your property’s area is another important factor in deciding whether to renew the lease. Market conditions determine how easy or difficult it will be to find a new tenant and what price you can set for the rent. An important element to consider is the vacancy rate, which measures the percentage of rental homes that are unoccupied, a figure that varies by city, region, and even season. Generally, a low vacancy rate indicates high demand and low supply, while a high vacancy rate suggests there’s an oversupply of available units and reduced interest from renters.

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In large cities with strong demand, the vacancy rate can fall below 3%, allowing you to re-rent the property quickly and potentially raise the rent. On the other hand, in areas with less activity or during slower rental seasons, the vacancy rate can exceed 8–10%, meaning longer periods without income. In those cases, choosing not to renew may leave your unit empty for weeks or even months. That’s why it’s important to stay informed about current market trends—whether prices are rising, the market is saturated, or demand is steady. Understanding this context can help you make a safer and more locally adapted decision.

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Profitability: current price vs. market price

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Another important factor when deciding whether to renew is analyzing your current rental income versus what you might earn with a new lease. Over time—especially if the rent hasn’t been adjusted, your tenant may be paying below the current market value. In growing markets, this can make it tempting to not renew and re-list the property at a higher price. However, before getting carried away by that possibility, it's wise to run the numbers. A €50 or €100 monthly increase may sound appealing, but if you lose one or two months of rent in the process of finding a new tenant, that potential gain could disappear entirely.

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Changing tenants also carries a risk: the new renter may not be as punctual or responsible as the one you have now. That’s why many landlords choose to negotiate a moderate rent increase (around 2–5%) with their current tenant, aligned with inflation or local market trends. This approach allows you to improve your income without losing continuity or taking unnecessary risks.

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Your future plans and legal aspects

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The decision to renew a lease also depends on your personal plans for the property. If you’re planning to use the home in the near future, sell it, or carry out major renovations, you may prefer not to renew in order to keep the property available. But if your goal is to maintain the property as a long-term investment and secure stable rental income, renewing with a reliable tenant is often the best option.

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Whatever your decision, it’s essential to consider the legal obligations involved. In many countries, there are mandatory notice periods and specific conditions that must be met, such as providing written notice well in advance if the lease won’t be renewed. It’s also a good idea to review the current contract terms, as some agreements include automatic renewals. And if you choose to continue, it's best to formalize the renewal with a new document or addendum, in accordance with local regulations. Complying with the law helps ensure a smooth transition and avoid potential conflicts.

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Communication and negotiation with the tenant

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Clear and transparent communication with your tenant can make the renewal decision much easier. If you feel confident with your current tenant, you can propose continuing the lease and negotiate reasonable adjustments, such as a small rent increase or minor improvements to the property. In many cases, the tenant also wants to stay and will be open to reaching an agreement.

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If you decide not to renew, it’s important to communicate this clearly, respectfully, and in advance. Explain your reasons and follow legal notice requirements to avoid misunderstandings. An open conversation may also lead to unexpected solutions, perhaps the tenant is willing to correct certain issues or had already planned to move. In these situations, listening and engaging in dialogue is always a smart move.