Lease hold overs and renewals

Three people in meeting, with two men shaking hands

If your lease has expired and doesn’t include an option to renew, the landlord doesn’t have to renew the lease.

However, most leases give the tenant an opportunity to 'hold over' the lease and stay in the shop on a month-to-month basis at the end of a fixed term. The tenant becomes a periodic tenant or tenant at will. It’s always best to have the landlord’s written agreement to hold over.

In this situation, either the tenant or the landlord can end or change the lease with one month’s notice.

At least six months and not more than twelve months before your lease expires, the landlord or agent must tell you in writing whether or not they are offering you a new lease or an extension of your lease if you don’t have an option.

If the landlord is not offering you a new lease, their written notification may tell you if you can continue to occupy the shop on the basis of holding over in the premises.

Holding over provides benefits in certain circumstances. It gives you time to negotiate a new fixed term lease for the premises or to find a different location for your business. It lets you sort out personal or business details if you are not sure you want to re-commit to a fixed term.

During the holding over period, although the lease has expired, the terms are still in effect. This means the tenant has to meet all the obligations of their lease, including maintaining the premises and making all payments, including rent, unless there is a written agreement to vary the terms of the lease.

The lease often gives both the tenant and the landlord the right to terminate the hold over period by providing written notice, usually 30 days.

Sometimes the lease allows the landlord to convert it to a month-to-month lease if the tenant has breached the lease. If this happens, the tenant can go to the NSW Civil and Administrative Tribunal and ask that the lease remain a fixed term lease. However, the Tribunal will expect the tenant to fix the breach of the lease and comply with the lease in the future.