Renew or Re-Lease: What Actually Delivers the Better Return?
Perth’s rental market continues to evolve, shifting from the extreme conditions seen in recent years toward a more balanced environment. According to REIWA, Perth’s vacancy rate is currently sitting at 2.6% (January 2026) — up from 2.0% at the same time last year. While this is still considered relatively tight, it signals a gradual increase in available rental stock and slightly less pressure than the peak conditions landlords experienced previously.
At the same time, rents have continued to rise, albeit at a more moderate pace. Median weekly rents now sit at approximately:
- $725 per week for houses (up around 6.6% year-on-year)
- $690 per week for units (up around 6.2% year-on-year)
This is a modest increase from early 2025, where median rents were closer to:
- $700 per week for houses
- $680 per week for units
What this tells us is that while rental prices are still growing, the pace has stabilised and vacancy rates are rising toward more balanced levels. For landlords, this creates an important decision point:
Do you hold onto a good tenant at a slightly below-market rent, or do you re-lease to chase the current market peak?
At face value, achieving a higher rent can seem like a clear win — but when you factor in vacancy periods, leasing costs, and risk, the numbers don’t always stack up the way you might expect.
Let’s break it down.
Scenario 1: Renewing with Your Current Tenant
Let’s say your current tenant is paying $500 per week, and market rent has increased to around $550 per week.
You choose to renew the lease at $530 per week — slightly below market, but still an increase.
What this means:
- Immediate rental continuity (no vacancy period)
- No marketing or leasing costs
- A known, reliable tenant
- Reduced wear-and-tear risk compared to a changeover
Annual income for rent only:
$530 × 52 weeks = $27,560
This option prioritises stability, consistent cash flow, and minimal additional expenses.
Scenario 2: Re-Leasing at Market Rent
Alternatively, you decide to terminate the tenancy and re-let the property at $550 per week. This will achieve an annual income of $28,600 for rent, however, the overall return for the year may fall below the renewal scenario or perhaps break even due to the additional costs for re-letting.
Factors to consider:
- Vacancy period (even 1–2 weeks can impact returns)
- Advertising and marketing costs
- Leasing and administrative time
- Potential risk of securing a less reliable tenant
Scenario 3: When Does Re-Leasing Make Financial Sense?
So, how much more rent do you really need to justify re-letting?
Using the above assumptions, the additional rent must offset:
- Vacancy loss
- Re-letting and marketing costs
- Risk exposure
In most cases, landlords need to achieve a significantly higher weekly increase — often more than $70–$100 per week above the current rent — before re-letting becomes financially advantageous within the first year.
Anything less may result in:
- Breaking even
- Or, in some cases, earning less overall despite a higher advertised rent
The Bigger Picture
While rent is an important factor, it’s not the only one — the net outcome is what matters.
Retaining a good tenant can offer:
- Stability and predictability
- Lower vacancy and leasing costs
- Reduced risk and disruption
However, there are absolutely times where re-leasing is the right strategy — particularly where:
- The current rent is materially below market
- The gap justifies the costs of changeover
- The tenancy itself presents risk or performance concerns
The key is not whether you can achieve a higher rent — but whether it delivers a better overall result once costs, timing, and risk are factored in.
At Celsius, we don’t take a one-size-fits-all approach. Where re-leasing is the right move, we will proactively position your property, manage the transition efficiently, and work to secure the strongest possible outcome. Equally, where retention delivers a better net return, we will guide you accordingly.
If your lease is approaching expiry or you’re considering a rent review, we recommend assessing your position early. Our team can provide a clear, property-specific analysis — including market positioning, likely achievable rent, and a side-by-side comparison of renewal vs re-leasing — so you can make a confident, commercially sound decision.
The best result isn’t always the highest rent — it’s the strongest overall return.