When a lease is structured as 3 + 3 + 3 or 5 + 5, many landlords see it as added security.
And on one level, that is true.
But there is another side to it that often gets overlooked.
An option is not primarily a benefit to the landlord. It is a right given to the tenant. It gives the tenant the ability to decide whether they want to continue into the next term. The choice sits with them, not with the owner.
Yes, only the initial term is fixed at the start. A 3 + 3 + 3 lease is not the same as signing a straight nine year lease from day one.
But that does not mean the landlord keeps full control once the initial term ends.
When an owner grants options, they are giving the tenant a continuing right over the property for that broader period. The tenant may or may not exercise those options, but the owner cannot simply treat the property as freely available at the end of the initial term. They cannot assume they will be able to re lease it, sell it vacant, occupy it themselves, or reposition it without first being subject to the tenant’s rights.
That is where the real cost lies.
The property may only be fixed for the initial term at the beginning, but it is still tied up by the tenant’s ability to continue. In practical terms, the landlord is giving away future flexibility.
This is the part that should be better understood by landlords, buyers and agents.
Options are often spoken about as though they are just a helpful extra that strengthens the deal. And yes, they can help secure a tenant and make a lease more attractive. But the real value sits with the tenant, because they control what happens at each option point.
From the owner’s perspective, every option granted is a concession. It may be the right concession to make, but it should be seen for what it is.
A 3 + 3 + 3 lease is not nine years of certainty for the landlord. It is three years certain, with the tenant holding the next two decisions.
That distinction matters.
Before agreeing to options, landlords should ask a simple question:
Who controls the property at the end of each term?
If the answer is the tenant, then that right has value. And that value comes at a cost.
Written by Adam Leishman
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