Both Lease and Rent may sound similar but there is a subtle difference between them. A lease is not the same as a rent. People often use these terms interchangeably. But the rent and lease are two terms that denote two different types of agreement. As a landlord, you should have a good understanding of both terms so that you can decide whether to have a lease agreement or a rental agreement with tenants. In this article, we will look at 5 major differences between Lease and Rent.
What is a Lease?
A Lease is an agreement between the landlord and the tenant to live in and control the property for a long period of time. The lease of a house agreement typically covers 6-12 months. It includes the rent amount of the property as well as rules concerning pets and the duration of the rental period. Landlords are not allowed to raise the rent for the duration of the contract. Both parties cannot alter any terms in the agreement until the end of the contract.
Pros and Cons of Leasing:
Leasing a property comes with both advantages and disadvantages for the landlord.
The pros to leasing the property are:
1. Steady income:
After leasing the property, the landlord gets the rent every month as mentioned in the lease agreement. The steady stream of rental income helps cover property tax, mortgages, and maintenance costs.
2. Lower maintenance cost:
When leasing the property, it’s the tenant’s responsibility to carry out day-to-day maintenance and house repair. It can save a lot of money for landlords in a long run.
3. Minimize tenant turnover:
Leases are usually longer than month-to-month rental agreements. It is beneficial for landlords to minimize turnover.
The cons to leasing are:
1. Difficulty in termination:
Leases are difficult to terminate if the tenant violates any lease agreement or fails to pay the rent.
2. Risk of bad tenants:
Leasing the property comes with the risk of having bad tenants who may cause damage to the property or pay rent late. Dealing with bad tenants is one of the riskiest things while leasing the property.
What is a Rental agreement?
The rental agreement is an agreement where the tenant agrees to use the property for a short period of time. The rental agreement is quite similar to a lease, the major difference in the lease and the rent is the duration of the time period. The tenant has to pay the rent monthly or quarterly for using the property. In a rental agreement, the landlord can alter terms in the agreement any time they want.
Pros and Cons of Renting:
The rental agreement is the agreement between landlord and tenant for paying the rent on a monthly basis.
The advantages of renting are:
1. Income generation:
House owner receives rental income every month which will supplement their income and can be saved for retirement.
2. Flexibility:
Landlords can easily alter the terms in rental agreements any time they want. It provides flexibility to both landlord and tenant.
The disadvantages of renting are:
1. Tenant turnover:
The rental agreement allows the tenants to leave the property anytime they want. It can increase tenant turnover.
2. Increase maintenance costs:
In most rental agreements, the landlord has to carry out maintenance and repair costs of the property which can be a big con to renting the property.
Learn about the things to avoid while renting your house.
Lease Vs Rent: Chart Comparison
Let’s see the 5 major dissimilarities between lease and rent in the chart.
| Basis for Difference | Lease | Rent |
| Length of the contract | It is more flexible as tenants can move out of the property at any time without facing any financial penalty. | Rent is paid on a monthly basis by tenants. |
| Flexibility | It is less flexible as breaking the lease early can result in financial penalties. | Tenants pay more for leasing a property as they have to pay a security deposit and application fees. |
| Cost | The cost of leasing a property is more expensive for tenants as they have to pay a security deposit and application fees. | The cost of renting a property is less because they don’t have to pay any additional fees. |
| Maintenance Responsibilty | The tenant is usually responsible for maintaining and repairing the property. | In a rental agreement, the landlord usually pays maintenance and repair fees. |
| Renewal | At the termination of the lease term, the lease is either terminated or renewed for another term. | Renters have the option of either paying rent for another month or moving out of the property. |
Similarities of Lease and Rental Agreement:
From the above Lease vs Rent Chart, we have already figured out the differences between a lease and a rental agreement. Now, let’s learn about the similarities of these terms.
Landlord-tenant relationship:
In both agreements, there is a landlord-tenant relationship where the landlord is the owner and the tenant pays rent to live in the property.
Rent payment:
The tenant has to pay the rent in both the lease and rental agreement for staying in the property.
Inspection of property:
Before signing both contracts, the landlord inspects the property to make sure it is in good condition and meets the needs of tenants.
Maintenance rules:
There are rules for maintaining and repairing the property such as cleaning and fixing the damages in both agreements.
From the article, we are sure that you have learned the differences between Lease and Rent. Although having dissimilarities, they are similar in some contexts. Since there are cons and pros to both Leasing and Renting. It is very difficult to decide whether to lease or rent your property. Contact OKC Home Realty Services if you are looking for someone to consult on any kind of property management services. We are happy to hear from you.
