You might wonder if a lease is the same thing as rent? The answer is no. There are subtle differences between leasing and renting an apartment. Leasing and renting may sometimes be confused for the same thing, but you should know the technical differences between the two if you plan to look for an apartment in the near future.
Mostly, leasing vs. renting an apartment comes down to your life situation and length of time you're looking to occupy a unit.
The biggest difference between leasing and renting is the length of time. When renting, the terms of the agreement can change monthly, since the agreement is renewed monthly. That means that landlords can potentially increase prices from one month to the next. It's up to you whether you want to renew or whether you want to simply move out or not renew the agreement.
For month-to-month rental agreements, it may be easy for a landlord to ask you to move out. They may not be required to give you a reason either unless they're being discriminatory or their motives are otherwise deemed illegal. They are, however, required to give you notice — 30 days is the typical amount of time.
Conversely, it's easy for you to terminate your agreement and move out, given that you give the landlord notice as well.
A lease offers stability for both the renter and the landlord. Landlords want tenants who will give them consistent rent payments each month, and tenants want to “lock in" the rental amount and length of the lease. Once the lease is signed, the landlord can't raise the rent, even if property or rent values rise.
If you're living in a rental and signed a one-year agreement, you signed a lease with your landlord. It states how much rent you will pay each month, and other property rules, such as an assigned parking space, who is responsible for maintenance, rules for pets and what date rent is due.
Rental agreements, on the other hand, may give landlords an edge when trying to rent a property that may not be as desirable to renters who want a more stable, long-term place to live. It can be advantageous to the landlord because they may be able to raise the rent, as rental agreements can be renegotiated from month to month.
How can this benefit renters? It provides more flexibility, especially if the tenant only needs a temporary place to live.
Roughly 35.5 million Americans move each year. Life happens, people get jobs or go to school in different cities, and may need a transitional place to live. According to Move.org, the main reason people relocate is that they found a new or better home.
Not everyone's life circumstance fits neatly into a one-year lease, so in these situations, a rental agreement would be beneficial. There are countless reasons why people move, but just to give you an idea, these are some real-life examples of why renters would want to sign a rental agreement over a lease:
Although leasing an apartment is the most common practice in the apartment rental market, you should still understand the nuts and bolts of a lease and rental agreement. If you've rented an apartment before, you probably already know the ins and outs of occupying an apartment under a lease agreement.
During the terms of the lease, the landlord can't raise the rent or change the terms of the agreement.
If you have a lease for more than 30 days (e.g. one-year lease), your rent can't be increased during the term of the lease, unless the lease allows rent increases.
A rental agreement is automatically renewed at the end of the period unless both the tenant and landlord agree upon other terms, in the form of a written notice. Landlords can change the terms of the rental agreement with proper written notice for these month-to-month rentals.
Remember that if you're leasing an apartment and your term ended, you're now technically on a month-to-month agreement. This means your landlord may raise your rent, either as a month-to-month option. There's also the option to renew your lease, however, your landlord may also raise rent with the new lease agreement.
There are pros and cons to leasing vs. renting and the right choice for each tenant will decide on individual circumstances.
Renting offers the freedom to move out of the apartment at any point throughout the year. It makes sense to rent if your situation involves strict timing and flexibility to move out at a moment's notice. The downside is that because of the flexibility, it might be more expensive if the landlord decides to raise the rent each month.
Leasing, on the other hand, is a long-term commitment but offers security and stability, without the risk of the landlord raising your rent.