The percentage is only one of three words that set the bill: what it applies to, how part months are charged and whether damages follow matter as much.
Holdover rent is the holdover percentage in the lease, usually 125 to 200 per cent, applied to the rent in effect at expiry, for each month or part of a month the tenant stays. On an illustrative 12,000 square foot office at $42.00 base and $14.00 of additional rent, a 150 per cent clause bills $77,000 a month instead of $56,000; a 130-day overstay charged as five full months costs $385,000, $145,658 more than the old rent for the same days. If the landlord has already let the space, damages for delaying the replacement tenant can add $110,466.
Worked in full in How to Read a Commercial Lease by Julian R. Sterling, with every figure reproduced in a free workbook.See the book on Amazon →
Three drafting choices decide the bill, and all three sit in one paragraph that tenants rarely read until they need it.
Monthly holdover rent = base rent at expiry × holdover % + additional rent
Holdover bill = monthly holdover rent × months billed (part months rounded up unless the clause is per diem)
Months billed in Excel: =ROUNDUP(days_over/30,0) as an approximation, or count the calendar months the clause names.
| Input | Value |
|---|---|
| Area | 12,000 sq ft |
| Base rent at expiry, per sq ft a year | $42.00 |
| Additional rent, per sq ft a year | $14.00 |
| Holdover rate, on base rent only | 150% |
| Days the tenant stays after expiry | 130 |
| Months billed (part months in full) | 5 |
| Replacement tenant's rent, per sq ft a year | $48.00 |
| Replacement lease: grace before extra free rent, days | 60 |
| Market rent for a short extension, per sq ft | $46.00 |
Step 1, the rent at expiry. Base rent is 12,000 × $42.00 / 12 = $42,000 a month. Additional rent is 12,000 × $14.00 / 12 = $14,000. The tenant was paying $56,000 a month.
Step 2, the holdover rent. 150 per cent of base rent is $63,000. Additional rent stays at $14,000, so the monthly holdover rent is $77,000. The premium is $21,000 a month, 37.5 per cent on the gross rent rather than the 50 per cent the clause headline suggests, because the uplift applies only to base rent.
Step 3, the months billed. 130 days spans five calendar months. The last one is used for ten days and billed in full: 5 × $77,000 = $385,000.
Step 4, the comparison. At the old rent, $1,841.10 a day, the same 130 days would have cost $239,342. The holdover premium is $145,658.
Step 5, consequential damages. The landlord had signed a new lease at $48.00, $48,000 a month or $1,578.08 a day. The replacement tenant's rent for the 130 days, $205,151, is not a loss: the landlord collects $385,000 of holdover rent for the same period instead, $179,849 more. The loss is in the new lease, which gives the incoming tenant one extra free day for each day of delay beyond 60: 70 days, $110,466. That is the landlord's damages claim.
| Line | $ |
|---|---|
| Holdover rent, five months at $77,000 | 385,000 |
| Extra free rent owed to the replacement tenant, 70 days | 110,466 |
| Total exposure | 495,466 |
| Old rent for the same 130 days | 239,342 |
| Cost of staying beyond what the old lease would have charged | 256,123 |
Holding over cost the tenant 2.07 times what the old lease would have charged for the period. The rent premium on its own, $145,658, is the part tenants budget for. The damages, $110,466, are the part that surprises them, because they are priced on someone else's lease.
The cheaper route was available before expiry. A six-month extension at $46.00 market rent, $60,000 a month, costs $360,000 for six months of certainty. That is $25,000 less than five months of holdover even before damages, and $135,466 less once the landlord's claim is counted. A landlord with a replacement tenant signed will usually refuse the extension, which is precisely the case in which holdover is most expensive.
| Holdover rate | 1 month | 3 months | 5 months | 6 months | Premium a month |
|---|---|---|---|---|---|
| 125% | 66,500 | 199,500 | 332,500 | 399,000 | 10,500 |
| 150% | 77,000 | 231,000 | 385,000 | 462,000 | 21,000 |
| 200% | 98,000 | 294,000 | 490,000 | 588,000 | 42,000 |
| Days over | Months billed | Holdover rent | Damages | Total |
|---|---|---|---|---|
| 30 | 1 | 77,000 | 0 | 77,000 |
| 60 | 2 | 154,000 | 0 | 154,000 |
| 90 | 3 | 231,000 | 47,342 | 278,342 |
| 130 | 5 | 385,000 | 110,466 | 495,466 |
| 180 | 6 | 462,000 | 189,370 | 651,370 |
Damages are nil inside the replacement lease's 60-day grace period and then grow by $1,578.08 for every further day, so a 180-day overstay carries $189,370 of them on top of $462,000 of holdover rent.
A landlord that claims the replacement tenant's lost rent on top of holdover rent counts the same days twice: here that gross claim would be $315,616, overstated by $205,151. Some clauses also cap damages or exclude consequential loss altogether. The arithmetic above is a claim under an uncapped clause, not a judgment. The point for the tenant is to know which clause it signed before the move date slips.
Reading 150 per cent as a daily rate. Applied per diem to 130 days, $77,000 a month is $329,096, so a tenant who budgets that way understates the bill by $55,904 when the clause charges part months in full. The opposite mistake, applying 150 per cent to the gross rent, overstates it on a clause that names base rent only. Both errors come from reading the headline percentage and skipping the two words that define its base and its period.
The lease abstract and re-letting assumptions behind cases like this one are in the free workbook for this book. For a tenant leaving early rather than late, see how a lease termination fee is calculated.
Landlord forms commonly set holdover rent between 125 and 200 per cent of the rent in effect at expiry, with 150 per cent a frequent starting point. On a $42,000 monthly base rent the premium is $10,500 a month at 125 per cent, $21,000 at 150 and $42,000 at 200, before any damages. Tenants usually negotiate a lower rate for the first 30 to 60 days.
Only if the clause says so. 'Base rent' leaves additional rent at 100 per cent; 'rent' or 'gross rent' applies the uplift to everything. On the worked lease, 150 per cent of base rent plus $14,000 of additional rent is $77,000 a month, a 37.5 per cent uplift on the gross rent; applied to gross rent the bill would be $84,000.
Many leases allow it, often after a notice period, including the cost of delaying a replacement tenant. If the new tenant pays $48.00 a foot on 12,000 square feet and earns an extra free day for each day of delay beyond 60, a 130-day overstay produces a landlord claim of $110,466 on top of $385,000 of holdover rent. The new tenant's rent for the delay is not a loss, as holdover rent replaces it.
This article is one calculation from How to Read a Commercial Lease. The book takes the same case from first principles to the decision, chapter by chapter, and every figure it prints is a live formula in the free companion workbooks.
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