Rental vs Lease
Rental and lease are words that are associated with real estate and commonly used to refer to the conditions of use of a property in exchange for money. Whether you are the owner of a property or looking for an apartment on rent, it is very important to enter into a written agreement with the opposite party. This is important as otherwise there might be trouble as the terms of use of the property are not clear and not in writing. Today tenants have more rights than before, and small disputes can end up in courts. There are differences between a rental and a lease agreement in many respects that will be highlighted in this article.
Rental
Rental is an oral or a written agreement between a landlord and the tenant that provides for the terms and conditions for the usage of the property by the tenant for a short time period. Typically it includes the payment that the tenant has to make every month in return for rights to live and use the land, office, machinery, or the apartment as the case may be. A rental agreement is flexible and is made on a month to month basis. The terms of payment and usage are flexible and can be changed by the concerned parties at the end of a month though they are subject to rental laws in the country. If the landlord decides to increase the rent, the tenant can agree to the increased rent, negotiate with the landlord, or decline to sign the new agreement and vacate the premises.
Lease
A lease is similar to a rental agreement in principle though it is clearly mentioned that it is for a set period of time that is much longer than is the case with a rental agreement. Generally, a lease is done for a year, and during this period, the landlord cannot increase the rent or make any other changes in the terms of use of his property. Also, the landlord cannot ask the tenant to evict the property if he has been paying the rent on time. In cases where vacancy rates are high, or it is hard to find tenants during certain time periods of the year, landlords prefer to go for a lease agreement. At the end of the lease period, a new agreement can be made, or the same lease agreement can be continued with the consent of the concerned parties.
What is the difference between Rental and Lease?
• Rental is an oral or a written agreement between a landlord and a tenant for a short time period (on a month to month basis) where the tenant agrees to pay a sum of money on a monthly basis whereas lease is a written agreement for a set period of time (usually 1 year).
• While the terms can be changed after a month in a rental agreement, a landlord cannot increase the rent inside the duration of the lease agreement and also cannot evict the tenant from the premises during the time period of the lease agreement.
• Lease provides stability and does not ask the landlord to look for a new tenant frequently. It is, therefore, preferred in places where there is a seasonal shortfall of tenants.