A lease that has gone well often ends awkwardly. The term is almost over, nobody raises the subject, and then a message arrives: the rent is going up. Or the other way around, the tenant gives notice three days before moving out.
Renewal is simple when both sides know the rules from the start. This article is for owners and tenants of houses and rukos (shophouses) in South Kalimantan, on how to discuss renewals and rent increases fairly.
What the rules say
The Civil Code (KUH Perdata) sets out a few basics on how a lease ends:
- A written lease ends by law when its set term runs out, with no notice needed (Article 1570).
- A verbal lease doesn’t end by itself. One side must give notice, with a notice period following local custom (Article 1571).
- If a written lease expires, the tenant stays, and the owner doesn’t object, the lease is treated as continuing. The rules for leases without writing then apply (Articles 1573 and 1587).
- An owner can’t end a lease just by saying they want to use the house themselves, unless that was agreed (Article 1579).
- Selling the house doesn’t end a lease already running, unless agreed otherwise (Article 1576).
Two practical lessons follow. First, a written lease gives a clear end date. Second, staying silent after the end date can create a new lease without writing, which is looser for the tenant. An owner who doesn’t want that must speak up on time. A tenant who wants to leave should also give notice in writing.
These rules are general. For a complicated case, ask a lawyer or a notary.
When to start the conversation
There’s no fixed figure. Many leases use one to three months before the term ends. The reasons make sense:
- Tenants need time to weigh it up, find another place, or arrange the move, especially ruko tenants whose business has customers at that location.
- Owners need time to advertise, tidy the house, and find a new tenant if the renewal falls through. A ruko left empty for months costs far more than a small discount for the existing tenant.
Write in the lease: who starts the conversation, the latest date, and by what means (a written message is enough, as long as it’s recorded).
How to raise the rent fairly
For privately owned houses and rukos, the price is basically a matter of agreement. We know of no general rule that caps the percentage of an increase, so what applies is the lease and what both sides agree. These are the ways people usually make an increase feel fair.
- Look at today’s market. Check the asking rents of similar houses or rukos nearby, not only the old figure. How to weigh this is in setting a rental price.
- Count the condition of the building. A house that was just repaired or improved deserves more. A house that hasn’t been maintained for years can’t ask for a big jump.
- Value the tenant. A tenant who pays on time and looks after the house saves you advertising costs, vacancy, and risk. Many owners give such tenants a slightly lower price.
- Use a reference you can explain. For example, follow the inflation published by Statistics Indonesia (BPS), or follow rises in specific costs such as property tax and upkeep. A clear reference is easier to accept than a number that appears out of nowhere.
- Tell them early. News of an increase one month before the end feels like pressure. Three months ahead leaves room to negotiate.
For tenants, a good reply is to negotiate with data rather than simply refuse. Bring examples of neighbouring prices or similar rukos, offer to pay upfront for a longer period, or ask for a gradual increase.
Three ways to write the increase into the lease
Instead of renegotiating every year, many long leases write the increase in from the start.
| Method | What the lease says | Suits |
|---|---|---|
| Fixed price | Same rent throughout, discussed again at renewal | Leases of one year or less |
| Periodic increase | From year two on, rent rises by a written percentage or amount | Leases of two to five years |
| Follows a reference | Rises with inflation or a fresh market valuation | Rukos or long leases |
The percentage is for both sides to agree. What matters is that the figure is written, not “to be adjusted later”. A sentence like that almost always ends in an argument.
The choice of lease length itself is covered in annual or monthly rent.
Renewal clauses worth writing
- Option right. Whether the tenant has the first right to renew, and until when.
- How to give notice. In writing, to a set address or number, at least so many months before the end.
- Renewal price. A fixed figure, a percentage, or how to calculate it.
- Renewal must be written. An addendum or a new agreement, not just a verbal one.
- Security deposit. Whether the old deposit carries over or is adjusted. This is explained in rental security deposits.
- Condition check. A joint inspection before renewal, so postponed repairs are recorded.
Other basics are in what goes in a rental agreement.
If the tenant disagrees with the new price
It happens, and it doesn’t mean the relationship is broken. A few middle paths that often work:
- A gradual rise. Part at the start of the renewal, part the following year.
- Pay earlier. The tenant pays two years at once at a lower yearly price. The owner gets certainty and cash upfront.
- Trade for repairs. The rent rises, but the owner fixes the roof, repaints, or replaces the pump.
- Part on good terms. If there’s no meeting point, agree the move-out date, the condition of the house at handover, and the return of the deposit.
An owner who withholds the deposit, or a tenant who delays leaving out of spite, usually both lose. If talks are stuck and the tenant stops paying or won’t leave, the lawful steps are covered in a tenant who stops paying or won’t leave.
Tax doesn’t change because of renewal
Each time a lease is renewed at a new price, the rental income is still taxed under the rules in force. A new price means the base figure changes too. Owners should check the tax on the new rent again. The general picture is in income tax on rent.
Closing
A renewal goes smoothly when it’s discussed early, the increase has a reason, and the result is written down. The owner keeps a tenant they already know. The tenant gets certainty on place and price. If you own a house or ruko in South Kalimantan and want a view on a fair rent or a new tenant, the Vorneo Property team can help through the contact page.
