Landlord and Tenant
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XI. Renewal matters

Supposing that an existing tenancy is about to expire, the landlord and the tenant can commence negotiation on whether to renew the tenancy.

For tenancy agreements entered before 9th July 2004, a landlord was in most cases bound to renew a tenancy for a domestic property with an existing tenant under the law. However, the law has changed. Tenancy agreements entered after such date no longer offers any statutory right of renewal in favor of a tenant. A tenant could only ‘renew’ his tenancy either through negotiation or contractually exercising an ‘option to renew’ under a tenancy agreement (if so provided).

An ‘option to renew’ clause in the contract usually requires the tenant to give a written notice to the landlord not later than a date specified in the contract. The clause may also contain reference to the terms of the new tenancy document, such as on the same terms as the existing tenancy or a slight increase in payable rent over the renewed term of tenancy.

Subject to the agreement between the parties, an "option to renew" clause may look like this (for reference only):

“It is hereby agreed that if the Tenant wishes to take a further term of two years from the expiration of the Term and at least six months prior to such expiration gives the Landlord written notice to that effect and has paid the rent and all monies hereby reserved and reasonably performed and observed the terms and conditions on its part herein contained up to the expiration of the Term, then the Landlord will let the Property to the Tenant for a further term of two years from such expiration at a new monthly rent and subject to the same terms and conditions as are herein contained except this clause for renewal.”

  1. What is the difference between an Option to Renew and a Break Clause?
  2. A landlord and a tenant intend to renew an existing tenancy. Except the rent, all of the terms are agreed upon. Is there any way that the parties can resolve the problem amicably?
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