In the real estate world, both leasing and renting are considered two sides of the coin. Technically, the lease is the agreement between the two parties, and rent is a payment that the second party makes to the first party. However, depending on the contract type and nature, both lease and rent agreements can be different.
Let us take a look at the summary of differences between the two agreements types for apartments.
|Parties in Contract||Lessor and Lessee||Landlord and Tenant|
|Maintenance and Damages||Lessee||Tenant, the landlord with a short-term contract|
|Ownership of the House||Option to buy for the lessee||No option to buy for the Tenant|
|Alteration during Contract||No Alterations, rent change||Alternations possible during the contract|
|Contract Terminations||No termination before Expiry||Can be terminated|
Both types of agreements for apartments offer some similar terminologies too. When shopping for apartments and houses, you must consider a few points. These factors often play a more significant role than evaluating the technical terms.
Let us evaluate our top 05 factors for lease v Rent decisions for apartments.
1) The Agreement Duration
You’ll certainly prefer renting an apartment if you just looking to stay for a few weeks. Renting a furnished apartment may seem expensive at first, but it does the job for many.
On the other hand, if you are looking to relocate to a particular place then leasing might be your best option. Apartments are smaller in size but are built with better furnishing than houses.
Also, you may find more options with apartments than houses to lease. Financing an apartment or house through a mortgage may prove costly. Signing a lease contract such as a Lease-Option can offer you flexible terms too.
2) Amenities and Services
Commercial property and real estate companies take these factors seriously when marketing their assets. Apartments available for rent are usually in close proximity to the urban areas. If you are staying for short-term and don’t have the time and space to fit in the amenities, look for renting an apartment.
Contrarily, leasing an apartment may sound like a better option if you are looking for a long-term stay. You will have to time fit in the amenities inside the apartment. However, apartments offer smaller living spaces than houses usually. Consider the contingent before you make the final call.
3) Agreement Terms and Conditions – Time and Amount
Both lease and rent agreements make clear terms and conditions before signing by both parties. However, in a rent agreement, the landlord has the authority to change the terms before the term expires. For example, the landlord may raise the rent amount before the expiry of the rent contract.
A lease contract usually signed for a longer period provides more stability. The lessee can be more assured of the agreement terms with a lease agreement. The lessor cannot ask for any alteration until the duration is served. This can be a significant point in apartment leasing, as most apartments come with higher rent rates.
4) Maintenance and Other Costs
In a short answer, both lease and rent agreements will make you pay for the maintenance costs. Renting an apartment can take the burden of maintenance somewhat. Most landlords and commercial real estate owners offer no maintenance charges but charge higher rents.
The other costs like security deposits and damage recoveries may be the same in both cases. However, the lease renewals require some formalities and incur additional renewal fees at expiry.
5) Ownership of the Apartment
There is no handing over of the apartment by the rent agreement. The rent agreements are made for short-terms, usually less than a year. The rent agreements for apartments do not offer any ownership rights to the tenant.
Lease agreements for apartments also usually come with no ownership rights. However, some commercial leasing includes:
- Lease-Option: That gives an option to buy the property like an apartment by the end of a specified term. Usually, the lessee makes installment payments for a particular term, and a lump sum payment to purchase the apartment. There is no obligation to buy the apartment though.
- Lease-Purchase: This type of lease binds both parties to complete the sale after a specified period. Both parties decide the apartment or property price before signing the contract.
Lease V Rent an Apartment – Which option is the best one for you?
In a nutshell, renting an apartment is a more flexible option for the tenant. It is also the riskier one. The leasing of an apartment option provides more stability and control to the lessee. In some cases, the lessee may get the opportunity to secure a lease to purchase the apartment as well.