Difference between renting and leasing

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Most people think the terms, rent and lease are synonyms and make the mistake of using them interchangeably.

While they both require the use of someone’s property in exchange for a promise to make a series of payments, the difference is primarily in the terms of the arrangement.

A lease is a contract for a fixed term to be paid over a fixed duration. The property owner cannot raise the rent until the duration lapses. Therefore leases provide some kind of Lock-in-effect.

Rents however are arrangements that may be for a shorter time period and have no Lock-in-effect. The property owner may not have an obligation to leave the rent at the same amount over the period.

The benefits of renting over leasing lie in the Lock-in-effect. You can decide to rent another property if the rent is raised. In a lease contract however, once you agree to the terms, you can’t just break the lease and decide to lease another property because it’s cheaper (you are locked in).

If the lessee is to break the lease however, he is obliged to make all the remaining future payments according to the terms of the contract.