Short Definition
Extension of lease for new term under same or modified terms, automatic in Ejar unless either party expresses intent to terminate 60 days before expiry.
Calculate it: Lease Dates CalculatorOverview
Legal Basis
Contract renewal is regulated by the Civil Transactions Law issued by Royal Decree No. (M/191) of 1444 AH, and the rules regulating the lessor–lessee relationship issued by Royal Decree No. (M/73) dated 2/4/1447 AH, under which a lease renews automatically unless either party notifies the other of non-renewal at least 60 days before it ends. Outside Riyadh, increases at renewal are subject to contractual freedom with no statutory cap; in Riyadh, rent may not be increased for 5 years from 25 September 2025.
Practical Example
A commercial office lease in Jeddah ending on Dhul-Hijjah 30. More than 90 days before it ends, the lessor proposes an 8% increase due to market price rises (an Ejar rent-adjustment request must be filed at least 90 days before the end, and no increase is allowed in Riyadh). The lessee negotiates and accepts 5%. The lessor enters Ejar, creates a renewal request with the new value (e.g., from SAR 60,000 to 63,000), sends it to the lessee, the lessee digitally signs, and the contract is officially renewed for the following year. If parties don't agree, the contract is left to expire and the lessee must vacate.
Common Mistakes
- ✗Remaining silent at period end believing the contract auto-expired — actually, Ejar auto-renews unless explicit notice is sent.
- ✗Sending non-renewal notice in the last week before expiry — the law requires notice at least 60 days before the lease ends; a late notice does not stop automatic renewal.
- ✗Proposing a large rent increase without market justification — the lessee may refuse and leave, a bigger loss than accepting reasonable increase.
- ✗Assuming renewal requires the same duration as the original — different durations can be negotiated (e.g., 6-month renewal instead of one year).
- ✗Neglecting to review contract clauses upon automatic renewal — old clauses may no longer suit (deposit, payment method).
International Differences
In Dubai, rent increases at renewal are regulated by Decree No. 43 of 2013 using the Dubai Land Department rental index, which caps the percentage based on market average; Ejari is the lease registration system. In Turkey, annual increases are capped to inflation index and cannot exceed a legally specified rate. In Egypt, Law No. 164 of 2025 raised old-rent contracts and set an end date for them (7 years residential, 5 non-residential); new contracts are open. In Saudi Arabia: negotiation freedom on increases outside Riyadh with a digital mechanism on Ejar to prove agreement, while increases in Riyadh are frozen for 5 years from 25 September 2025.
FAQs
When is renewal considered automatic?▾
Can the lessor raise rent by any percentage at renewal?▾
How do I object to automatic renewal?▾
Does the lessee's signature on renewal require an increase?▾
What's the difference between renewal and extension?▾
Related questions
- How much notice is needed to not renew a lease in Saudi Arabia?
- Can a landlord raise the rent when the lease is renewed?
- Who pays the Ejar lease documentation fee, the landlord or the tenant?
- If the landlord sells the rented property, does the lease end?
- Can a landlord in Riyadh refuse to renew a lease?
- What is the Riyadh rent freeze and who does it cover?
- Does a lease renew automatically on Ejar?
- Can a lease be amended after it is documented on Ejar?
