Rental vs Lease
Rental and lease are terms related to real estate and often used to describe the conditions for using a property in exchange for payment. Both property owners and potential tenants should enter into a written agreement to avoid any confusion or disputes regarding the terms of use. Tenants currently have more rights than in the past, and small disagreements can lead to legal action. There are several differences between rental and lease agreements.
Rental
A rental agreement is an oral or written arrangement between a landlord and tenant that outlines the terms and conditions for using the property for a short period. This agreement typically includes the monthly payment required from the tenant in exchange for the right to live and use the land, office, machinery, or apartment. Rental agreements are flexible and made on a month-to-month basis. The terms of payment and usage can be changed by both parties at the end of the month, subject to rental laws in the country. If a landlord increases the rent, the tenant can agree to the new amount, negotiate, or decline the new agreement and leave the property.
Key Takeaways
- Rental agreements are flexible, short-term arrangements, while leases are for a set period, usually one year.
- Rental terms can be changed monthly, while lease terms remain fixed for the duration of the agreement.
- Leases provide stability and prevent landlords from needing to find new tenants frequently, making them preferred in areas with seasonal tenant shortages.
Lease
Similar to a rental agreement, a lease is a written contract for a set period, typically one year. During this time, the landlord cannot increase the rent or change the terms of use for the property. Additionally, the landlord cannot evict the tenant if they have been paying rent on time. In situations where vacancy rates are high or finding tenants is challenging during specific times of the year, landlords may prefer a lease agreement. At the end of the lease term, a new agreement can be made, or the existing lease can continue with both parties’ consent.
Difference between Rental and Lease
• A rental agreement is an oral or written contract between a landlord and tenant for a short period (on a month-to-month basis) where the tenant agrees to pay a sum of money monthly, while a lease is a written agreement for a set period (usually one year).
• The terms of a rental agreement can be changed monthly, but a landlord cannot increase rent or evict a tenant during a lease agreement’s duration.
• Leases provide stability and prevent landlords from frequently looking for new tenants, making them preferred in areas with seasonal tenant shortages.
