Lease Renewal Calculator
Decide whether to renew at a modest increase or turn the unit over at market rent, by pricing the vacancy, the make-ready and the leasing fee against the rent you would gain.
Lease Renewal Calculator
Results recalculate instantly on every keystroke. Nothing you type is transmitted.
What this result does not account for
- Assumes the replacement tenant is as reliable as the current one.
- Vacancy priced on a 30-day month at market rent.
- Excludes tenant improvement allowances, which dominate commercial turnover.
In short: Renewing at 1,236 beats re-letting at 1,296 by 3,664 in year one, because turnover costs 4,534. Market rent would have to reach 1,601.33 — a 29.56% premium over the renewal rent — to justify the turn.
Formula
turnover cost = vacancy + make-ready + leasing fee + admin
break-even rent = renewal rent + (turnover cost − renewal cost) ÷ 12
[('renewal rent', 'current rent plus the renewal increase'), ('market rent', 'what a new tenant would pay'), ('vacancy loss', 'market rent × days ÷ 30'), ('break-even', 'the rent at which the year-one gap closes')]
Worked Example
- Price the renewal: modest increase, minimal cost, no gap.
- Price the turn: market rent, but net of every turnover cost.
- Compare the two on a twelve-month net basis.
- Solve for the market rent that closes the gap.
- Judge whether your market actually offers that premium.
A 1,200 rent renewing at 3% becomes 1,236 and nets 14,682 over the year after 150 of renewal cost. Re-letting at 1,296 sounds better until you add 35 days vacant (1,512), make-ready 1,800, a leasing fee of 972 and 250 of advertising — 4,534 in total, leaving 11,018. Renewing wins by 3,664. Market rent would need to reach 1,601.33, a 29.56% premium, before the turn pays — and even then it takes 6.09 years to recover.
Strengths & Limits Of This Model
Where this engine is strong
- Solves for the break-even market rent, not just the comparison
- Prices vacancy, make-ready, leasing and admin separately
- Extends past year one with a payback period
Where it stops
- Residential assumptions
- Tenant quality is not modelled
Practical Use Cases
Setting a renewal offer
Finding the increase a good tenant will accept.
Deciding to re-let
Testing whether the market premium justifies the gap.
Budgeting turnover
Pricing vacancy, make-ready and leasing before they happen.
Reviewing a management recommendation
Checking a manager's advice to push for market rent.
Modelling a portfolio
Estimating the true cost of a given turnover rate.
Methodology & Editorial Standards
Both paths are stated as twelve-month net figures so they are directly comparable: renewal rent times twelve less renewal cost, against market rent times twelve less every turnover cost. Vacancy is priced at market rent on a thirty-day month. The break-even rent inverts the comparison to find where the year-one gap closes, and the payback figure extends the view beyond year one for cases where the turn is a long-term play rather than an immediate gain.
Computation runs in IEEE-754 double precision at full internal precision; rounding to two decimal places occurs strictly at the display layer, so no cumulative drift enters the result. All monetary outputs use accounting presentation — grouped thousands, two decimals, negatives in parentheses — so figures can be transcribed directly into a model or working paper. Division-by-zero and out-of-domain inputs return an em-dash rather than a misleading number.
This engine was reconciled against an independent reference implementation and hand-verified for the worked example above before release. Our full five-stage review process is published on the About Us page.
Disclaimer. This calculator is provided for informational and modelling purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Verify all figures with a qualified professional before acting on them.
Lease Renewal Calculator — 10 Expert FAQs
10 analyst-written answers to the questions practitioners actually ask — optimised for voice and answer-engine retrieval.
Is it better to renew or find a new tenant?
Usually to renew, because the costs of turning over — vacancy, make-ready, leasing fee, advertising — commonly exceed a year of the rent difference. This page solves for the market rent at which that stops being true, and the required premium is often larger than landlords expect.
How much does turnover cost a landlord?
Frequently one and a half to two months of rent once vacancy, make-ready, leasing fee and advertising are counted, and more if the unit needs paint and flooring. The vacancy itself is usually the largest component, and it scales directly with how long the unit sits.
What is a reasonable renewal increase?
Enough to keep pace with your costs without prompting a search. In most markets that is a low single-digit percentage, and the test in this page is whether the increase you are considering would cost more in turnover risk than it gains in rent.
Should I offer a renewal incentive?
It can be cheap insurance. A few hundred in carpet cleaning or a small appliance costs far less than five weeks vacant, and it gives the tenant a reason to stay that is not purely financial. Enter it as a renewal cost here and see how little it moves the comparison.
How long should I expect a unit to sit vacant?
It depends entirely on your submarket and season, and it is the single input most worth getting right, because vacancy loss dominates the turnover cost. Use your own history rather than a market average; a unit that has always let in ten days should not be modelled at thirty-five.
Does a longer lease change the calculation?
Materially. A twenty-four month renewal removes a whole turnover risk from the horizon, which is worth conceding a lower increase for. Conversely a month-to-month arrangement carries turnover risk continuously and should be priced at a premium.
What if the tenant is below market by a large margin?
Then the gap compounds every year you leave it, and at some point the turn becomes unavoidable. The right approach is usually to close a large gap over two or three renewals rather than in one move, so the tenant has a chance to absorb it and you avoid the vacancy.
Should I count my own labour in make-ready?
Yes, at what your time is worth. Self-managing landlords systematically understate turnover cost by treating their own work as free, which biases every renewal decision toward turning over. If you would not pay someone else to do it, you are still spending the time.
Does this apply to commercial leases?
The structure does, but the magnitudes are different. Commercial turnover adds tenant improvement allowances and broker commissions measured in months rather than fractions of a month, and vacancy periods run in quarters rather than weeks — which makes renewal even more strongly favoured.
Why is the required premium so large?
Because the turnover cost must be recovered from the rent DIFFERENCE, not from the rent. If the gap is sixty a month, a four thousand cost takes more than five years to repay. Small differences in rent simply cannot service large one-off costs, which is the whole insight of the calculation.