If you’re looking for a new place to live, you may have come across two similar terms: “lease” and “rent.” You’ll likely see these terms used interchangeably, but when it comes to the type of legal agreement you have with a landlord, they mean two different things. And while these two residency situations share some
The post What Is the Difference Between ‘Lease’ and ‘Rent’? appeared first on The Zumper Blog.
Rental Guides
Credits: iStock.com/xavierarnau
If you’re looking for a new place to live, you may have come across two similar terms: “lease” and “rent.” You’ll likely see these terms used interchangeably, but when it comes to the type of legal agreement you have with a landlord, they mean two different things. And while these two residency situations share some similarities, there are many differences between rent vs. lease that can determine which is actually right for you.
Get to know the difference between leasing an apartment vs. renting one, the pros and cons for a rental agreement and a lease agreement, and the questions you should ask yourself before choosing one over the other.
The difference between lease and rent
The main difference between lease and rent is regarding time.
A lease is an agreement for a renter to occupy a space for a fixed amount of time, usually 12 months. However, a lease could be for a few months up to 24 months, depending on the renter’s needs and the landlord’s discretion.
A rental agreement, on the other hand, is where a renter occupies a space on a month-to-month basis.
Similarities between lease and rent
There are many similarities between leasing an apartment versus renting. When signing a contract for a new place, whether leasing or renting, you will find these similarities:
They are both for a specific period of timeBoth renting and leasing an apartment require a security depositThe renter is responsible for all utilitiesThey will have rules regarding pets, guests, and a landlord’s right to enter
The differences between an apartment for lease and an apartment for rent
A unit that is for lease is one that requires a renter to sign a lease agreement that requires them to stay for a fixed period of time, pay the same amount of rent each month, and give an adequate move out notice at the end of the lease agreement. Continuing the lease requires a new lease agreement, complete with new terms, including a different rent amount, new start and end dates for the agreement, and any other changes that occurred to the unit since the previous lease agreement.
A unit that is for rent is one where a renter can sign an agreement that allows them to stay as long as they want, as long as the landlord allows it. Many of the same terms apply in a rental agreement that apply in a lease agreement, including that the agreement includes a fixed period of time (such as one full month), a fixed rent amount, rules about moving out early or on time, and other terms and conditions of occupying the unit. A rental agreement typically renews at the end of each month unless the landlord or renter decides something should change.
Other similarities between rent vs. lease include:
The renter has obligations to maintain the unit while they stay there, and the agreement explains who pays for any damage sustained to the unit during the agreementThe agreement outlines move out notice requirements and timelines, such as 30, 60, or 90 days before moving outThe price of rent stays the same unless both parties agree to change itThe rules and regulations regarding rental and lease agreements can vary from state to state and city to city
While the legal agreement is what makes a “for lease” rental unit different than a “for rent” unit, you are more likely to see landlords use the phrase “apartment/house for rent” as opposed to “for lease.”
Lease agreement
Type of contract: Lease deedParties involved: Lessor and lesseePayment period: Yearly or 6 monthsOwnership: With the lessorChanges: Changes can’t be made until a fixed period of time
Rent agreement
Type of contract: Leave and licenseParties involved: Landlord and tenantPayment period: Monthly, quarterly, yearlyPeriod of time: Short termOwnership: With the landlordChanges: Changes can be made easily at month-to-month end
Pros and cons of leasing
Here are some reasons to consider leasing over renting an apartment:
Signing a lease provides you long-term security for multiple months, up to two years, depending on the landlord’s lease agreement timelinesLeasing a rental unit for multiple months allows you to make the place feel like a homeThe amount you pay in rent won’t go up without your approval, even if the property’s value increases during your lease, and it can only change after your lease is set to expire
There are some drawbacks to leasing an apartment, including:
The long-term commitment might not be good for every renter and is best for people who aren’t planning to move out in a few monthsIf you want to stay after a lease expires, you have to sign a brand new leaseIf you want to leave during your lease, you must provide an adequate notice provided in the agreement, but you may also have to pay fees, a portion of the remaining rent owed, or the rest of the rent owed. This all depends on the landlord and the terms in the agreement.If you abandon a unit before your lease is up, you are likely still responsible for paying the landlord or could face legal action from the landlord
Pros and cons of renting
Consider these benefits to renting instead of leasing:
You are more likely to be able to negotiate rental price and other terms more often since your agreement expires at the end of a month and only renews if you and the landlord make no changesSome of these places may come furnished since they’re meant for temporary rentersAs long as you meet the notice requirements laid out in the rental agreement, you can leave the unit at the end of any 30-day rental periodIf you and the landlord get along and you want to stay in the unit for a long period of time, you may be able to negotiate a long-term agreement, like a lease
Review these drawbacks to renting:
Because of the month-to-month plan, a landlord could require you to leave the unit, pay more in rent, enact certain policies that may not benefit you (such as a no-pet policy) at the end of the 30-day timeframeMonth-to-month may feel like your living situation is not secure
Which one should you do?
When thinking about for lease versus for rent, ask yourself these questions to determine which is best for your circumstances:
Do I plan to live here for a year or more? Or, do I plan to live here for less than a year?Am I actively looking for a forever home, whether that be another rental or a home to purchase?Would I feel more secure with a long-term lease, or am I more comfortable with a month-to-month agreement I can leave whenever I want?Do I want to build a long-term relationship with my landlord?
The difference between leasing and renting is more than a matter of fine print. Understanding the difference can help you decide which is the right living situation for you at this moment. That’s why it’s so important to know the difference between these two terms when you’re searching for a new place and before you sign a new agreement with a landlord.
The post What Is the Difference Between ‘Lease’ and ‘Rent’? appeared first on The Zumper Blog.