Rent vs. Lease

Difference Between Rent And Lease Rent Rent, a periodic payment for the use of any capital asset, most…

Difference Between Rent And Lease


Rent, a periodic payment for the use of any capital asset, most commonly and generally applied to the leasing of real estate. In the usual case, a formal leasing agreement is reached between the owner (landlord) and the tenant. If the owner uses the property himself, the rental income that he could have received on the market is called “imputed rent.” The term rent may be said to have three basic senses: 1) real estate rent; 2) non-real estate rent; 3) economic rent.; and

Real Estate Rent

Historically, attention has focused first on rent as income to the owner of land. This was only natural in basically agricultural societies. The land was the primary factor of production and the most important source of income. The use of land was a means to income for the user. For this reason, a tenant was both willing and able to pay the owner for the right to use the land.

The development of urban communities led to expanded nonagricultural uses of land. As a consequence, tenancy became commonplace for residential, industrial, and commercial, as well as agricultural uses. To the tenant, not merely the land but also all the structures on it and other improvements to it are assets desired for use. Rent therefore has come to be regarded as the payment for the use of any segment of real estate. In practice, no distinction is usually made between the rental payment for the use of the land and the rental payment for the use of the improvements. Rent is usually payable in money, but it may also take the form of materials, produce, or labor.


Lease, an agreement by which an owner, or other person entitled to possession of real estate, conveys to another party the right to use property for a specified period by payment of rent. The person who conveys or lets the property is called the landlord or lessor. The person who hires the use of the property is called the tenant or lessee. The interest of the tenant in the property is called a leasehold, and the landlord’s interest is called a reversion.

Leases may be classified by the many different purposes for which they are used, such as 1) residential lease for an apartment or house; 2) commercial lease for office or store space; 3) industrial lease for factory loft or building space; 4) mining lease for the right to extract oil, gas, or minerals from the land; 5) farm lease for the use of land and buildings for agricultural use; 6) and limited use lease, as for the erection of a sign or billboard; .

The terms and conditions of leases vary significantly. Form leases, available in most stationery stores, are commonly used for residential and commercial purposes. Such form leases are usually purchased by, and drawn in favor of, the landlord. Many contain provisions that severely limit the rights of the tenant. Consequently, one should seek the advice of an attorney, if doubt exists, before signing a lease.

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