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ARTICLE · 23 JANUARY 2019

Options to renew a lease – key considerations for landlords

Holding Redlich
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Article explains options to renew a lease, how to manage them and provides case examples.

AustraliaReal Estate and Construction
Katie Miller
Katie Miller
Sandra Hollingsworth
Sandra Hollingsworth
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An option to renew a lease for a further term is a common feature in commercial and retail leases. 

But if you are a landlord and you have not had to manage an option to renew process in a while, here are some key considerations. 

What is an option to renew? 

An option to renew is the tenant’s right to require the landlord to grant the tenant a new lease when the existing lease expires. The lease will usually provide that the new lease will be on the same terms as the existing lease, except that the rent will be reviewed in accordance with the rent review mechanism in the lease. 

What should a landlord do when a tenant gives notice exercising an option?

Firstly, carefully review the option clause in the lease to see what the tenant is required to do to validly exercise the option. Secondly, consider whether you want to grant a new lease for the further term and whether you have rights to refuse the option.

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This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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