This is the second episode in our new video series dramatizing the shared and different terms of occupancy under residential rental and lease agreements, and the controlling provisions.

The prior episodes introduces periodic and fixed-term tenancies.  

Landlords seeking tenants – tenants seeking landlords

The rental market is the market environment in which landlords seek tenants (and vice versa). The condition of the rental market is determined by:

  • the population of tenants;
  • the number of properties competing for these tenants; and
  • the comparative position of the property and its amenities in relation to competing properties.

The rental market sets the amount of rent a landlord is able to charge on any given day to solicit and induce prospective tenants to enter into rental or lease agreements.

Generally, tenants on month-to-month rental agreements pay higher amounts of monthly rent for a unit than do tenants with lease agreements. Month-to-month tenants pay a premium for the privilege of being able to vacate the premises on 30 days’ notice, without liability exposure for future rents. This privilege held by the tenant contributes to the landlord’s uncertainty about their income and costs of tenant turnover, hence the rent premium to cover the risks.

Tenants typically pay lower rents when they enter into a lease agreement. In stable rental markets, the longer the lease period the lower the rent.

Rent may, however, be subject to adjustments for future price inflation, local appreciation and management decisions. During weak market periods of generally high vacancy rates, price-competitive landlords may favor using month-to-month rental agreements rather than lease agreements. When rents begin to rise, landlords adjust rents to market by serving notice of a change in rent rates.

Lease negotiations on expiration

A landlord may not alter the terms of a lease agreement during the life of the lease without consideration and the tenant’s consent.

To extend a soon-to-expire lease agreement, the landlord may contact the tenant and offer to:

When the tenant desires to remain in possession when their lease expires, the amount of rent a landlord may demand is limited only by negotiations and economic forces in the rental market, with the exception of rent control vicinities.

As an alternative, a landlord proactively negotiates and grants options to renew or extend when initially entering into lease agreements. The right to extend the occupancy may be all that is needed to induce the tenant to remain a tenant on expiration of the lease. [See RPI Form 565]

Editor’s note – Stay tuned! A new episode in this series will release each week.