Despite being used interchangeably and sharing some similarities, when it comes to property agreements in Australia there are some key differences between renting and leasing discussed below. Both differ in their ability to change terms, time periods, parties and payment structures.
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What is Leasing?
A lease is simply a written contract granting someone the use of an asset, like a house, office or apartment. Leasing contracts have two parties, the lessee (the user of the asset) and the lessor (the owner of the asset). The lease will be for a specified period of time, usually six-months, a year or even longer. Lessee’s make regular payments to the lessor. Neither party can alter any terms of the lease agreement until expiry unless both parties agree. This means that for the remainder of your lease, the rent cannot be increased unless both parties previously agreed.
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How does Renting differ?
In contrast, renting is a more casual form of agreement. Renting implies a shorter time period, usually less than one year or until both parties mutually decide to stop the agreement. Rental agreements also have two parties: landlords and tenants. Periodic payments of money will be made by the tenant to a property owner, also known as a landlord, to live in a house or apartment. With renting, payments are usually fortnightly or monthly. For this reason, renting is a more flexible and short-term alternative to signing a lease.
It’s worth noting that renting is less common when dealing with commercial property. However, the periodic payments by commercial tenants in lease agreements can still be referred to as rent.
Changing the terms of agreements
Once a lease is signed the contract’s terms can not be changed for the remainder of the contract. However, if you are renting, the landlord can alter the terms of the agreement at any time. For example, your landlord may decide to raise the rent or change specific terms. They can do this as long as they provide the tenant written notice of the changes. Landlord’s increasing rent has become particularly common in many Australian cities amidst the constant growth of housing costs.
Final Thoughts
Deciding whether to lease or rent your property is dependent on your specific circumstances. If your needs are flexible and you prefer not to commit to a long period then renting is a great alternative to leasing. However, if your situation favours the stability of enforced contractual terms then the certainty of leasing may be more suitable. If you’re still unsure speak with one of our expert property lawyers today.
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