What is the difference between leasing and renting an apartment

Many landlords prefer leases to rental agreements because they are structured for stable, long-term occupancy. Placing a tenant in a property for at least a year may offer a more predictable rental income stream and cut down on turnover costs. That said, once a lease agreement is signed, the rental cost is set in stone until the end of the agreement.

In an up-and-coming area with consistently growing property values, 12 months of a fixed rental cost could mean you miss out on substantial incremental income from market increases.

According to Home Buying Institute , the median home price in the U. This forecast was issued in July and extends into the summer of Bottom line on Leases: A lease is a great option for landlords looking to make stable income, but may negatively impact profitability should property value grow within that year span.

Due to the short term of a rental agreement, they allow much more flexibility when it comes to rent increases. Technically speaking, rent may be revised each month with a rental agreement to stay in-line with the current fair market rent so long as rent increases comply with local law and the notice provisions that govern the month-to-month rental.

Using a tool such as Rentometer is useful for searching rental price comparisons in your area. It may open the door to many qualified tenants looking for a short-term rental, which may be in high demand near college campuses or major hospitals. A tenant looking for a long-term lease may be scared away by the flexibility of a month-to-month lease, which may leave them subject to frequent rent raises or indeterminate rental periods.

For landlords, the costs of more frequent tenant turnover should also be kept in mind, including advertising, screening, and cleaning costs. Additionally, if your rental is located in an area with lower occupancy rates, you may have trouble keeping your unit rented for long periods of time. A rental agreement may be a good option for landlords that are focused on flexibility, particularly in areas that see quick tenant turnover, such as college towns.

Whether you choose to offer a lease agreement or rental agreement, it is vitally important that you know who your tenant is. According to Move. Not everyone's life circumstance fits neatly into a one-year lease, so in these situations, a rental agreement would be beneficial. There are countless reasons why people move, but just to give you an idea, these are some real-life examples of why renters would want to sign a rental agreement over a lease:.

Although leasing an apartment is the most common practice in the apartment rental market, you should still understand the nuts and bolts of a lease and rental agreement. If you've rented an apartment before, you probably already know the ins and outs of occupying an apartment under a lease agreement. During the terms of the lease, the landlord can't raise the rent or change the terms of the agreement.

If you have a lease for more than 30 days e. A rental agreement is automatically renewed at the end of the period unless both the tenant and landlord agree upon other terms, in the form of a written notice.

Landlords can change the terms of the rental agreement with proper written notice for these month-to-month rentals. Remember that if you're leasing an apartment and your term ended, you're now technically on a month-to-month agreement. This means your landlord may raise your rent, either as a month-to-month option. There's also the option to renew your lease, however, your landlord may also raise rent with the new lease agreement. There are pros and cons to leasing vs. Renting offers the freedom to move out of the apartment at any point throughout the year.

It makes sense to rent if your situation involves strict timing and flexibility to move out at a moment's notice. The downside is that because of the flexibility, it might be more expensive if the landlord decides to raise the rent each month.

Leasing, on the other hand, is a long-term commitment but offers security and stability, without the risk of the landlord raising your rent. She writes regularly about travel, money and being a good human. Traveling and snowboarding are her two favorite things to do. Rent agreements that fall under leave and licence contract also give greater freedom to both, the landlords and the tenants.

As the licence can be terminated at will, no form of lock-ins imposed in the agreement would be valid, even if the agreement says so. Rent agreements that work under the leave and licence contract are more common in the residential real estate segment, where the entire exercise is more informal. In India, rent agreements in the residential segment are typically signed for a period of 11 months, to avoid the legal complexities involved in the signing of a lease.

The main reason for this, is that rental agreements of a period less than a year do not require registration. A document that enables tenancy for a period of less months, does not require registration and attains the form a licence. Also note that with states implementing the draft model tenancy law of the centre, all rent agreements in India will have to be made and executed in line with the provisions in the respective state-specific laws.

The Uttar Pradesh government, in January , for example, promulgated a tenancy ordinance, with an aim to safeguard the interests of landlords, as well as tenants. The law is likely to bring down tenant-landlord disputes, especially in high-intensity rental markets of Noida, Greater Noida and Ghaziabad, by clearly specifying the duties and responsibilities of the transacting parties. A lease creates in favour of the tenant an exclusive interest in the property, while a leave and licence agreement does not create any interest in the property towards the tenant.

Skip to content. Table of Contents Leasing and renting: The difference What is a lease agreement? What is a rent agreement? Lease vs rent: Key differences Difference between rent agreement and lease What is a leave and licence? Why are rent agreements for 11 months?

Rent agreements for 12 months or more have to be compulsorily registered. Should I opt for a lease agreement or leave and licence agreement? Was this article useful?