Renewal Rate
Definition
Renewal rate is the share of residents who extend their stay at the end of a term. It is the cleanest measure of whether the lived experience matches the marketing — and because a renewal avoids a void and a turnover cost, it is usually the most profitable 'lease' an operator can win.
The formula
Renewal rate = Residents who renewed ÷ Residents whose term ended in the period
- Residents who renewed
- those who signed a further term, including those who moved to a different room in the same building
- Term ended
- only residents who actually reached a renewal decision in the period — not the whole resident base
Worked example
Our worked example: in a quarter, 18 residents reach the end of a term. Eleven renew, seven leave. The building's replacement cost per departure is £640 in void, turnover and marketing.
- 01Renewal rate = 11 ÷ 18 = 61.1%.
- 02Seven departures × £640 = £4,480 of replacement cost in the quarter.
- 03Lifting renewal to 72% would mean two more renewals: 13 ÷ 18.
- 04Two departures avoided × £640 = £1,280 saved, with no marketing spend attached.
£1,280 a quarter from an eleven-point movement in one metric, before counting the rate you did not have to discount to fill those rooms. This is the arithmetic that makes retention work cheaper than acquisition work in almost every coliving building we look at.
Renewal is the cheapest occupancy in the business. There is no listing, no enquiry, no viewing, no void between residents and no move-in sequence. Every other route to a filled bed costs marketing money and empty days; this one costs a conversation held early enough to matter.
Timing decides the outcome more than price does. A renewal conversation opened six to eight weeks before term end happens while the resident is still deciding; the same conversation at two weeks happens after they have viewed somewhere else. Operators who systematise the early conversation — a fixed prompt in the calendar rather than an intention — consistently see a different number than those who react to notice.
Renewal rate is also where a rate increase is really tested. Raising rents across the rent card is easy; holding renewal rate while doing it is the actual skill. Track the two together, because a rate rise that drops renewal by fifteen points has usually cost more in voids and replacement than it collected in rent.
The common mistake
Dividing by the whole resident base
Using every resident as the denominator rather than only those who reached a renewal decision produces a number that looks excellent and means nothing — a building where most terms have months left to run will show a high figure regardless of how it treats people. The denominator must be residents whose term actually ended in the period. This is the single most common way a retention dashboard flatters itself.
Frequently asked
Should I offer a discount to renew?+
Compare it to the full replacement cost, not to the rent you would give up. If a departure costs you void days, a turnover clean and marketing spend, a modest renewal incentive is frequently the cheaper option — and unlike a discount offered to fill an empty room, it buys a resident you already know.
When should the renewal conversation start?+
Before the resident starts looking, which in practice means six to eight weeks out on flexible terms. The precise week matters less than the fact that it is scheduled rather than triggered by their notice, because notice means the decision has already been taken.
Is renewal rate just the inverse of churn?+
No, and conflating them is a common reporting error. Churn measures departures against everyone living there; renewal measures decisions against everyone who had one to make. A building can show low churn and poor renewal at the same time simply because few terms happened to end that month.
Resident churn explained
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Resident lifetime value
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