Written by

What’s the Difference Between Renting and Leasing?

Tenant categories

Regarding tenancy, we can differentiate between two types of inhabitants. Firstly, there are those who are in search of a temporary home, since they are in town only for a short period of time. In this category we can count employees who have been relocated to another city until the completion of a project and need a place to work during this transitional period. Then there are occupants who are looking for a long-term base and who are open to signing a contract for a year or more.

There is a form of subletting agreement for each of the two tenant categories. Many people don’t realize that leasing and renting are not actually the same thing; they differ quite significantly in many ways, including the different legal clauses involved and the length of term.

We decided to engage in some research to compile the key characteristics of each type of contract. So, without further ado, we present the most important features of both leases and rental agreements:

Rental Agreements

A rental contract is a flexible agreement between two people stating the terms and conditions of renting an asset. Such a contract is usually a month-to-month arrangement, but can have a term of up to a year, and it has no implications beyond that. It usually renews itself each month if proper notice is not given, and either of the two parties can change the terms whenever they wish after talking to the other party. The exact time of giving proper notice can vary depending on where you live, so make sure you consult your local regulations to be sure (usually it’s 30 to 60 days).

This agreement is ideal for temporary use of assets. For example, someone might need construction equipment to carry out a small project, so it’s better for them to rent it rather than lease it. It offers plenty of flexibility to both parties and can always be easily updated if something changes.


A lease is a physical contract in which the lessor and the lessee establish their mutual conditions. The lessor is the proprietor of the asset in question (whether that’s a piece of land, some equipment, a room or an entire building), while the lessee is the person who uses the asset.

Compared to rental agreements, leases are much stricter with regard to details and clauses. The exact terms are discussed by both parties and, once they’re agreed upon, they are listed in the agreement. Once the contract is signed, changes cannot be made by either the lessor or the lessee without the other party’s consent. If one of the parties breaches the contract, there will be consequences and penalties applied per the contract agreements.

Besides the terms and conditions, another non-negotiable factor in a lease is its duration. The lease is fixed for a certain period of time (the term can range from one year to even a decade) and is agreed upon by both parties before they sign the contract. This is great for lessors who are looking for long-term, reliable financial gain.


Before you start looking for space, sit down and think carefully about the type of agreement you’d like to sign. If you’re interested in a short-term contract involving a bit of flexibility, then a rental agreement might be the perfect option for you. On the other hand, if you’re looking for a longer-term solution, you might want to become a lessee. And of course it goes without saying that, whichever path you choose, you should make sure the clauses of the contract accord with your interests and not just with those of your landlord.

Comments are closed.