The subtle difference between leasing and renting

The main difference between a lease and rent agreement is the period of time they cover. A rental agreement tends to cover a short term—usually 30 days—while a lease contract is applied to long periods—usually 12 months, although 6 and 18-month contracts are also common. Once the lease term is up, it usually extends to a month-to-month rental.  

Similarities between leasing and renting

Lease and rental agreements have the following things in common:

• They are specific to a period of time.

• They include a security deposit, which the renter pays the landlord to cover damages, but which the landlord returns at the end of the term.

• They specify what utility costs and maintenance the owner is responsible for and what maintenance the renter is responsible for. 

• They give rules for usage, including allowances for pets and a landlord’s right to entry.

It’s important to read the contract closely to make sure you have a good understanding of the terms and conditions before you sign it.

There are pros and cons to leasing, but if you’re looking for a long-term housing solution, a lease offers greater peace of mind.

Advantages of leasing

• Greater stability. Stability is the key advantage of a lease. You’re entitled to stay in your home through the duration of the contract. It’s an ideal arrangement for someone who knows they want to stay in a place long-term. 

• No rent increases. The landlord can’t raise the rent for the duration of the contract. Once you’ve signed a lease, you’re locked into the monthly rent set forth in that document.

• Rent-controlled renewal. In rent-controlled areas, you may be entitled to renew your lease at the same rate (or with a slight percentage increase) at the end of a lease term, making expensive cities more affordable for some. 

Disadvantages of leasing

• Less flexible. You have less flexibility when signing a lease. You’ve agreed to stay in a place for the amount of time set forth in that contract. That means if the price of rents suddenly decreases in your area, you may find yourself paying higher rent than you would be if you had moved recently.

• Harder to move suddenly. The same goes for sudden life changes. If you get a job in another part of the country or need to move back home to help out during a family emergency, a long-term lease can turn into an obstacle. Some landlords allow subletting which can help make leasing more flexible.

• Consequences to breaking a lease. There are consequences for breaking a lease. that include the loss of deposit, or even being on the hook for the remaining rent. Check the terms of the lease to find out what the consequences are for early termination.

If flexibility is your highest priority, a rental agreement is the way to go.

Advantages of renting

• Short-term flexibility. A monthly rental agreement can be ideal if you know you’re only going to be in town for a set amount of time—for an internship, for instance—or if you’ve just arrived in town and want a place to land while you look around for other housing options. 

• Easier to make life changes. Unlike a lease agreement, it accommodates big, unexpected life changes that may require you to leave the area.

• Opportunities to renegotiate. Many rentals convert to a month-to-month contract at the end of the first 30 days, and while you aren’t going to be signing a new rental agreement every month, it does give you a chance to renegotiate some terms of the contract if you want, such as asking for the landlord to allow you to have a pet.  

Disadvantages of renting

What you gain flexibility you lose in stability, so figure out what your priorities are before you decide to lease or rent.

• Less stability. Both you and the landlord have the right to walk away from a rental contract at the end of the 30 days. That can be freeing unless you want to stay—which may not be up to you. In your tenant screening, make sure to go over your contract and take note of if the landlord has to notify you within a certain time period that you have to leave the home at the end of your contract. 

• Rent increases. In many places, the landlord can raise the rent every time the contract renews. That means if property values go up in your neighborhood, your landlord may well want to see that reflected in your rent. A sudden rent increase can mean the difference between staying and going. The specifics of when and how much your landlord can raise the rent should be in your contract. Just like asking you to move out, they may have to give you notice within a certain time period to increase rent. 

Bungalow is the best way to live with roommates. Our homes are designed for shared living, located in the best neighborhoods, and take care of the details—like furnishing common spaces, scheduling monthly cleanings, and handling payments. Whether you already have roommates or are looking for new ones, there’s a Bungalow with your name on it. Find your Bungalow.