HOW IS LEASING DIFFERENT FROM RENTING? – HOME, CAR, APARTMENT FEES
What is the difference between a lease and a rental agreement? Lease and rent, two terms used especially in the real estate business, and generally when talking about properties. Most often, people wonder if these two terms mean the same thing. And some would reasonably argue that there exists a difference between them. True, both involve agreeing to a contract and the properties are to be borrowed, what then do we need to know about these terms.
This article will be discussing in full what each term means, the similarities between then and their differences, and at the end, we will all be able to see where each one applies and understand the concept of a lease and rent better.
This is a contract where a party gives out certain properties like land, house or other properties to another for a specified period of time in exchange for a certain amount of money, often paid periodically. Lease involves two people, the lessee, and the lessor.
A lessee is the expected use of the property in question, while the lessor is the legal owner of the property.
Both the lessee and the lessor comes into a contractual agreement, and the lessee agrees to pay the lessor for his properties that he is planning to use. A lease agreement is entered once and always have an expiring date, and at the end of this date, the agreement is canceled.
If both parties then wish to continue, they need to reach a new agreement with new terms which may be different from the previous agreement. The official period of a lease agreement varies, but the least is generally agreed to be 12 months and it can be for as long as possible, provided it’s stated in the contract.
Detailed information is listed in a lease contract, this information includes responsibilities of each party and other plans covering their protection. Based on the fact that there is the presence of a contract, it is very unlikely and sometimes impossible to leave a lease agreement before the end date, and if any of the members choose to do that, he tends to suffer certain penalties.
This is also known as hiring or letting. It involves payment of a specific amount for a temporary use of a property for a certain period of time, these properties include car, house, shops etc. The time frame for rent varies, you can rent a property for hours, days, months etc.
When a property is rented, the owner still has rights to control how the property will be used, and in most cases, he runs the maintenance of the property and pays the properties charges. The agreement of a rent can be altered by either party in the rental contract. Rent also involves two people, the owner, and the person renting.
There are so many reasons why one might decide to rent. These reasons include:
- If a property is meant for temporary use. Like a truck for moving your properties from your previous house to the new one.
- When one is financially incapable to buy, then he switches to renting. Especially in the case of a house.
- When one has such a property but its presently not within a reasonable range he would also prefer renting. You might own a car but the car may be unavailable for certain reasons, it would correspond to wasting money if you buy another one for that short time of the car not being available.
These are just a few reasons why one might decide to rent a property.
Comparison and Differences between Lease and Rent
Having highlighted some important properties of both lease and rent, then one can now find the differences and similarities between them.
- The properties involved do not belong to the borrower both in rent and lease.
- The properties received are for a specified period of time.
- Both involves periodic payments.
- A lease can be for a very long period of time, while rent can be as short as minutes and as long as months (as in the case of shops, materials for building etc.)
- For lease, the owner has little or no authority over the property as long as the agreement is on, while the owner of a rented property has right over the product.
- Agreement of a lease is very hard and sometimes cannot be terminated without penalty, while agreement for rent can be terminated with no penalty attached.
- At the end of the contract in a lease, it cannot be renewed. Instead, both parties enter a new agreement. Rent on the other hand is renewable, this can be done immediately the first agreement comes to an end.
From the above discussion, we have been able to see in a bigger picture what rent and lease are, one obvious fact is both are motivated by the needs of an individual. And one major difference we’ve highlighted is the length of use. As earlier stated, we can now reasonably conclude that there exists a difference between lease and rent.