RENT VS LEASE: WHICH ONE SHOULD YOU PICK?

Finding a new house is a monumental task; however, planning to live in a rental home can be difficult. Whether to sign a rental or lease agreement is one of the most frequently asked issues when looking out for accommodation. Although "lease" and "rent" are sometimes used synonymously, hiring a property differs from renting a house. A rent agreement or a lease agreement could be used to establish tenancy. Lease agreements and rent agreements are distinguished by the duration of the tenancy period and rent payments.

The lease is a two-party agreement in which one party allows the other to use and maintain a property for a set period without purchasing it. It is not the same as renting, but it is similar. Renting implies a short-term agreement between the tenant and landlord in which the tenant pays rent for the use of a property owned by the landlord.

LEASE

A lease is a contractual agreement between two parties, the lessor and the lessee, wherein the lessor buys the asset and grants the lessee the right to use the support for a set period in exchange for periodic lease rentals. Lease rentals are considerations for the use of another party's assets. The lease Deed lays down the terms and conditions of the lease, and it has been defined under Section 105 of the Transfer of Property Act of 1882.

RENTING

Renting is letting out any property or possession to someone for a defined period with a basic pay schedule. In a nutshell, renting is a short-term agreement between a tenant and a landlord. Until the deal expires, the tenant pays rent for using the landlord's assets, such as land, a car, or a building. The two parties involved in this case are the landlord and tenant. The term is extended if both parties agree to renew the agreement. In most cases, the lease is for less than a year, whereas rental agreement laws vary from state to state.

Leasing vs Renting

The critical difference between a lease and a rent arrangement is the length of the time. While a lease contract is applied to longer durations, typically 12 months but six and 18-month contracts are also prevalent. A rental agreement typically covers a short time, typically 30 days.

When to opt for a lease?

A lease might be the best choice if stability is your top goal because they are designed for secure, long-term tenancy; landlords frequently prefer leases over rental agreements. A more stable rental income stream and lower turnover expenses may result from renting to a tenant for at least a year on a lease agreement.

CONTAINS TO LEASE:

The rental price is fixed for the duration of the lease once it is signed. A fixed rental fee for 12 months could mean you lose out on a sizable amount of additional income when property prices steadily rise.

WHEN SHOULD ONE PREFER A RENTAL AGREEMENT OVER A LEASE DEED?

A rental agreement is typically temporary; there is considerably greater flexibility for increments in rent. As long as rent increases adhering to local legislations and the notification requirements varying from state to state that control the month-to-month rental, rent can be changed monthly in consonance with the current fair market rent. A rental agreement is suitable for a tenant who can't commit to a 12-month lease term.

CONS OF A RENTING AGREEMENT:

The flexibility of a month-to-month lease, which could subject a tenant to frequent rent increases or indefinite rental periods, may scare away a tenant hoping for a long-term lease. Furthermore, if your rental is situated in a place with lower occupancy rates, you can find it challenging to maintain a long-term tenant.

A rental agreement might be a wise choice, especially in places with frequent tenant turnover, like renting in cities with many colleges where students rent PGs and flats for a shorter duration.

CONCLUSION

You must know your tenant before providing a lease or rental agreement. The same is the case with the tenant to scheme through the property details and to get a clear picture of the landlord/lessor before investing their money in a property. One should be doubly assured that they're renting or leasing to the right individual by thoroughly screening the buyers.

While they both differ, they appear similar to a layman. Consequently, it's critical to comprehend the concept entirely. There are more variations between renting and leasing besides who is responsible for maintenance and servicing. Even though there are two parties to the contract or agreement, each function is distinct. For instance, both parties have equal rights under a lease agreement; however, in a rental agreement, the landlord is in a dominant position over the tenant, even though either party may opt to end the arrangement at any moment.

PUJA KESARWANI