Not only that, it also creates an incentive for renters to hold on to units they do not need anymore, because if they forego the lease then the next renter will

Not only that, it also creates an incentive for renters to hold on to units they do not need anymore, because if they forego the lease then the next renter will get much higher rent (and so will they, at their new place). So they keep it, just in case.