Over the years, there has been a misconception between the words Lease and Rent. A lot of people have deemed the words the same thereby using them interchangeably. But according to legal terms, these two words are different in meaning and can be differentiated by their period or time interval. So, it is helpful to know the difference between the two words to know which of the words or terms is suitable for any future agreement to be signed.
What is a Lease?
A lease is a legal agreement signed that allows the owner of a property known as the Lessor to give it out to another individual known as a Lessee for use over a fixed time, at least for a year or more, laying down rules of agreement that can not be changed during the period of a lease without facing a legal consequence. A lease can cover properties such as houses, apartments, land, real estate, and vehicles. There is an option to buy after the period of leasing is over.
Advantages of a Lease
- A lease gives a feeling of settlement due to its long duration
- The option to buy after lease comes with a discounted price
- There is no option for the increment of fees for a lease agreement
- The agreement of the lease can not be breached without both the Lessee and Lessor coming into agreement.
Disadvantages of a lease
- The lessee of a property can not break out of the agreement halfway unless the person is ready to forfeit the remaining deposit of lease rentals paid initially at the start of the agreement
- The Lessor can not increase the cost of lease rentals until the leasing period is overdue to the fixed agreement that is set at the start of the lease.
What is a Rent?
Rent is a legal agreement that allows an individual to use the property of another for a short time. The content of the agreement can be changed during the period of renting. A person renting out a house or apartment is termed a Landlord while the person renting it is called a tenant.
Advantages of Rent
- A rent is encouraged for a person that is not committed to a place due to its short term, thereby prevented loss when the person taking the rent wants to leave.
- A rent term can be easily changed by the landlord, that is, the rent can be increased during the period of rent due to its flexibility.
Disadvantages of rent
- The rent of a property can be increased anytime by the landlord
- There is no option to buy after the period of rent included in the agreement.
The main difference between a Rent and a Lease is the period involved in the agreement. A rent is short-term while a lease is long-term. A lease can provide a stable income for the lessor but it can become a disadvantage especially when the property value increases during the period of leasing out the property due to its fixed nature of agreement whereas rent is good for the short-term profit. So when next you as a property owner wants to sign an agreement with another person, think of which of the following term you will go for, the short-term profit or the long and stable term profit.