The terms leasing and Renting are used frequently in the apartment rental market, but did you know there's actually a difference between the two? They're often erroneously used interchangably, but you should know the technical differences between them to keep yourself protected. It could end up being a lifesaver.
What is leasing?
Leasing an apartment is the most common practice in the apartment rental market. If you've rented an apartment before, you probably already know the ins and outs of occupying an apartment under a lease Agreement.
"Leasing" an apartment is renting under the constraints of a Lease Agreement. It's a contract between a tenant and landlord that lays out the guidelines and duration of the lease. Included could be terms like how long the occupancy will be for, who is responsible for maintenance, whether or not pets are allowed and many other specific guidelines.
A lease is typically not renewed automatically. What happens at the end of a lease agreement will vary from landlord to landlord. Some landlords will notify tenants that they're on a month-to-month lease once the initial long-term agreement is complete. Some landlords, however, will request that tenants sign a new long-term lease agreement for another extended period of time.
What is renting?
While "renting" is generally used to describe living in a unit that's not actually owned by the tenant, a rental agreement is different than a lease agreement. It's similar to a lease agreement but doesn't account for an extended period of time. Typically, a rental agreement is renewed monthly as opposed to annually, bi-annually or longer.
Many of these agreements operate in function like a lease agreement, as they're renewed automatically each month, unless the tenant or landlord expressly say they wish to end the agreement. But having the ability to leave the agreement at any given month is a characteristic exclusive to renting instead of leasing.
Another distinguishing difference between leasing and renting is that, when renting, the terms of the agreement can change monthly as the agreement is being renewed monthly. That means that landlords can potentially jack up prices from one month to the next – but you always have the option to not renew the agreement.
Which is best?
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 but comes with the danger of flexible terms and prices. But, in some instances, renting makes more sense than leasing.
Leasing, on the other hand, is a longer-term commitment but offers security and stability for a pre-determined amount of time.
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