Leasing agreements and renting agreements are similar in a lot of ways. In fact, they often share the same stipulations. There are, however, some major differences between the two, and knowing the pros and cons of leasing vs renting a house can help you determine the best option for your specific needs.
Leasing vs renting a house
Most people know the difference between owning a house and renting a house. However, not everyone knows the difference between leasing vs renting a house.
Leasing is usually a longer contract than renting. Leases are typically for 12-36 months or more, while renting is usually on a month-to-month basis. Both options have pros and cons that you should consider before making your decision.
Pros of leasing a house
Leasing a house provides various benefits that renting just cannot offer.
1. Stable place to live
Signing a long-term lease gives you a level of stability that month-to-month renting cannot provide. The lease guarantees you have a place to live until the term is up, so the landlord cannot force you out of the property in the middle of the lease. Keep in mind, however, that if you break any part of the lease, such as not paying rent, then an eviction can still occur.
2. Fixed payment
Signing a lease agreement locks in the rate you pay monthly. When renting month-to-month, the rate you pay can fluctuate, which makes it difficult to budget your expenses. Leases, however, prevent the landlord from raising your monthly payment during the lease term.
3. Possible discounts
It is not uncommon for landlords to offer a discount for people who sign longer leases. This is because a longer lease means the landlord doesn’t have to look for new renters as often.
This stable source of payment combined with a reduction of turnover expenses saves the landlord money, which they sometimes pass down to the renter.
4. The landlord cannot make changes to the agreement
Once you have signed the lease agreement, the landlord cannot make changes to said lease. The lease is a legally binding contract that you and the landlord agreed upon.
So if, for example, the landlord decides they don’t want to allow pets in the house after they have already signed a lease stating pets are allowed, they cannot force you out or force you to get rid of the pet.
Cons of leasing a house
Despite the benefits that come with leasing, there are also some downsides that you should consider.
1. Less flexibility
Signing a lease means you are locked into that long-term timeframe. So, if you need or want to move before the lease is up, you’re looking at a costly and possibly difficult situation to break the lease.
If you do want to break the lease, you may be on the hook for the remaining rent. Having a lease is usually not a good idea for people who are expecting to move in a short timeframe.
2. You may be responsible for maintenance
When leasing a house, you may be responsible for property maintenance. Some landlords will require a full repairing and insuring lease, which means the tenant is responsible for external, internal, and structural maintenance and repairs. Other landlords will maintain and repair the structure of the house, while still requiring the tenant to maintain the exterior and interior of the home.
Pros of renting a house
Renting has a lot to offer, especially for people who don’t want to sign a long-term contract.
1. More flexibility
Renting doesn’t require signing a lease for a certain timeframe. This means you can move out of the house at anytime. Because of this simple pro, renting is better suited for people who are in college, or those who have to relocate regularly for work.
2. Not responsible for maintenance
In most instances, the tenant is not responsible for repairs or maintenance of the home’s interior, exterior, or structure. Since the landlord pays for maintenance, you don’t have to worry about the extra costs that come with home repair costs.
3. Negotiation terms
Since the agreement is on a month-to-month basis, you may be able to renegotiate the original terms of the rental agreement. This could be lowering the rent, allowing alterations to the house, or asking your landlord to allow pets.
Cons of renting a house
There are a few disadvantages to renting a house that may be a deal breaker for you.
1. Less stability
Month-to-month renting means the landlord can chose to no longer rent to you. For whatever reason, they can decide to end your business relationship by not continuing with the month-to-month agreement. This can leave you frantically trying to find a new place to live.
2. Fluctuating costs
Your rent costs could change from one month to the next. This is because there is no agreement that guarantees you will pay the same amount every single month. This can make budgeting difficult, since you won’t know exactly what you will pay for rent.
Finding a house
Finding the right house can be frustrating. After all, this is the place you will be calling home for the near future. Knowing the pros and cons that come with leasing vs renting a house can help make your decision a bit easier.
Consider the pros and cons of each option and compare that to your specific situation. What aspect is more important to you? Are you looking for more flexibility? Renting may be right up your alley.
Do you want a house that provides stability for a year or more? Then leasing would be a better option for you. No matter what you choose, make sure to thoroughly read over the agreement before signing.