3. If a tenancy agreement specifies the end date, provides a renewal clause stating that it can be renewed every two years with an adjusted rent, and a termination clause of one-month notice by either party, is it legally binding? Will it be deemed as a tenancy at will after the first term?

3. If a tenancy agreement specifies the end date, provides a renewal clause stating that it can be renewed every two years with an adjusted rent, and a termination clause of one-month notice by either party, is it legally binding? Will it be deemed as a tenancy at will after the first term?

This example is likely to be a tenancy for a fixed term with an option to renew and a break clause allowing either the landlord or the tenant to early terminate the tenancy agreement by one-month notice during the currency of the term.

An option to renew typically provides that the tenant would be entitled to take a further term of the tenancy if the tenant gives prior written notice to that effect to the landlord at least a specified period before the expiration of the original tenancy and on the condition that the tenant has reasonably performed and observed the terms and obligations during the original tenancy. 

In order for the option to renew to be binding upon the successor(s)-in-title of the landlord (e.g. the succeeding owner of the property), the tenancy agreement in writing has to be duly registered in the Land Registry in accordance with section 3(1) of the Land Registration Ordinance (Cap. 128).

The landlord should be conscious that whether to exercise the option to renew is largely a choice for the tenant.  In practice, it is not usual for the landlord to commit to successive terms of renewed tenancy with yet an option to renew for another term.  In any case, a break clause such as the one mentioned in this example would serve its purpose when the landlord wishes to terminate the tenancy.