Lease vs Rent

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Difference Between Lease and Rent

A lease is an agreement where the lessor gives possession of its assets to the lessee for a predetermined period instead of periodic payments where maintenance is the lessee’s responsibility. In contrast, rent is an arrangement where the asset owner or landlord transfers the possession to its tenant for periodic payments. The landlord can change the terms subsequently and generally for a short time.

On the surface, lease and rent seem similar, but there is a major difference between them.

When an asset is given on a lease, the maintenance responsibility lies on the lessee. When a business invests on a lease, the burden of care lies in the industry.
On the other hand, when an asset is rented, the maintenance responsibility lies on the person who rents the investment or the property.

Difference Between Lease and Rent

Without any ado, let’s get started.

Lease vs Rent Infographics

Lease vs Rent Video Explanation

Key Differences

The lease is taken when a business does not have ample fixed capital. At the same time wants to use the asset but does not want to pay for it. On the other hand, rent is taking property for a monthly fee.
Leasing contracts have two parties – lessor and lessee. A rental agreement has two parties as well – landlord and tenant.
Leasing is usually done for assets/equipment. Renting is mostly done for properties or lands.
In leasing, the lessee does the servicing and maintenance when they take the equipment on lease. In renting, on the other hand, the landlord does the servicing and maintenance even if the tenant takes the property on rent.
Leasing is done for a fixed period – mostly for the medium to long term. On the other hand, renting is done for a short period, emphasizing every month.
In leasing contracts, the terms and conditions are predetermined, and the contracts are made by taking mutual acceptance. However, a renting agreement can change the terms and conditions at any time.
In leasing, an offer of purchase is given on the expiry of the leasing contract. However, no such proposal is shown on the expiry of the renting agreement.

Lease vs Rent Comparative Table

Basis for Differences	Lease	Rent
1. Meaning	The lease is entering into a contract with the lessee to use an asset/property for a long period.	Rent agrees with the tenant to use an asset/property for a certain period.
2. Term	Usually, a leasing contract is signed for the long term.	The rental agreement is signed for a short time.
3. Accounting standards	Leasing contracts are based on accounting standard 19 (AS-19).	There is no particular accounting standard that is followed in a renting agreement.
4. Parties	Lessor and lessee.	Landlord and tenant.
5. Consideration considered	The monthly installments are paid for the lease.	Rent is paid monthly/quarterly for using the property/asset.
6. Maintenance	In leasing, the responsibility for maintenance of the property lies on the lessee.	In renting, the asset's maintenance burden lies on the tenant.
7. Change in contract/agreement	Once the contract is signed, there is no change for a fixed time.	The landlord can change the agreement anytime they choose.
8. Offer at expiry	Once the term is over, the lessee is asked to purchase the asset/property.	There is no such offer given to the tenant by the landlord.

Conclusion

Both are different, but to a layperson, they stand similar. Therefore, it is important to go deep into the concept and understand it. Even if the major difference between leasing and renting is who needs to do the maintenance and servicing, there are other differences.

And even if two parties are involved in the contract/agreement, the roles of each party are different. For example, in a leasing contract, both parties have equal rights. But in a renting agreement, the landlord has more power than the tenant though both can decide to go out of the agreement at any time.