What does a lease renewal clause promote?

A lease renewal clause primarily serves to promote stability and continuity for both the landlord and the tenant. By including such a clause in a lease agreement, both parties are given a sense of security regarding their housing or rental situation. For tenants, it guarantees that they have the option to remain in the property, often under similar terms as the original lease, thus providing peace of mind and reducing the need to search for new accommodations.

For landlords, a lease renewal clause helps ensure that the property remains occupied, reducing potential vacancy periods. This can lead to consistent rental income and less turnover-related costs, such as marketing the property for new tenants or incurring lost rent during the vacancy period.

While factors like rental price adjustments or tenant flexibility can play a role in lease agreements, the core purpose of a lease renewal clause is to create an environment of stability for both parties involved in the leasing process.