Leasing VS Renting a Condo: What’s The Difference?July 20, 2021
What is the difference between leasing vs renting?
- Contract length
- Flexibility of terms
- Responsibility for maintenance
- Payment terms
- Option to buy the property
Let’s say you’re all set and ready to move into the condo considered as one of the best places to live in the Philippines. You now might be wondering about the difference between leasing vs renting a condo.
Although these terms are often used interchangeably, remember that there is a clear difference between leasing vs renting a condo. Both lease and rental agreements are legally binding. In this article, we’ll focus on lease vs. rent in the context of condominiums. Make an informed decision for your property by reading on.
For both lease and rent contracts, the two parties (lessor-lessee, landlord-tenant) will come to an understanding of how the condominium unit can be occupied for a fixed period. The contract will also typically define terms regarding the right of entry, payment, guest rules, pet rules, repair and maintenance responsibilities, and more.
Condo rental contracts are similar to condo lease contracts. However, the main difference between leasing vs renting a condo lies in the contract length. Whereas a lease will last for 1 year, a rental will generally last 1 month or a few months. Both the parties will have to abide by the terms of the contract for the agreed-upon duration. That means the landlord or lessor cannot alter the contract without cause. Oftentimes, breaking the contract will result in penalties such as in the form of eviction, fines, or forfeiting the security deposit.
Flexibility of Terms
The difference in flexibility of terms between leasing vs renting a condo is another factor you have to consider. In general, rental agreements are legally binding on a monthly basis. Depending on your agreement with the landlord, a for rent condo contract can be automatically renewed at the end of the monthly period. With permission from the landlord, the tenant may change the contract terms every month.
With leasing condo units, neither of the parties can make adjustments to the initial agreement until the contract expires. No new guidelines that are not indicated in the initial contract can be added.
When you move into a for-lease condo, you will stay for 1 year or more and you will have to follow the contract terms throughout the period. Leasing condos are ideal for families and individuals looking for stability in their property. Some lessors also offer 18-month or 24-month leases, but 1 year is the standard contract length. But if you are not entirely sure about how long you will need to stay in the condo, you can look for rental agreements. This is why rental condos are often ideal for expats, employees, vacation guests, and students who only need to stay temporarily.
Responsibility for Maintenance
Another distinct difference between leasing vs renting a condo involves maintenance responsibility. In a rental contract, the maintenance responsibility typically falls upon the landlord. This means the landlord is in charge of ensuring the property is suitable to live in, making repairs if needed. Alternatively, in a lease contract, the maintenance responsibility falls on the lessee. If you want to avoid costly repairs, you might be better off with a for-rent condo.
The payment terms for leasing condos are more stable compared to renting condos. This is because the terms and conditions in a lease are clearly defined in the initial agreement. As stated earlier, no alteration can be made by both parties within the contract duration. Let’s say both the lessor and lessee agree on a certain payment amount for 1 year. The payment is consistent until 1 year.
For renting condos, the payment terms can change. Given the contract is short-term (typically 1 month), the landlord can freely decide to adjust payment terms such as regarding amount or scheme. A rental agreement can offer you more flexibility in terms of duration. However, the financial price should also be a factor to consider.
Option to Buy the Property
Upon the contract expiration of leases, the lessee will be offered an option to buy the condo. Given its value after depreciation, you may be able to buy the unit for a significantly lower price. If you happen to like the unit, you can go ahead and buy it. Keep in mind that owning a condo has numerous benefits.
On the other hand, for rent condos will typically have no option for purchasing. Once the contract expires, the tenant has to evacuate the unit or ask for a contract renewal.
It’s always wise to stay informed about the difference between leasing vs renting a condo as it comes down to the choice between flexibility and stability. Take note that different condos will also have different agreements about leasing vs renting units as well.