Lease is a contract between lessee and lessor where lessor permits the lessee to utilize the asset for a specific period. Whereas renting is a contract between the landlord and tenant, as tenant pays rent for the utilization of asset possessed by the landowner. The word hire is also used in context of “to sell the use of something”. There are very minor differences between these terms; so, people get confused in these terms. To avoid confusion, here is the article which explains the differences that exist in these terms.

Lease

The term lease has been characterized as a contractual assent between two parties: the lessee and the lessor; whereby the lessor purchases the assets and concedes the lessee the privilege to utilize the asset over a predetermined period, beside periodical lease rentals. Lease rentals function as a concern for the utilization of the asset that has a place with second party. The agreement where terms and states of the lease are explained is known as ‘Lease Deed’. The leasing of building, land and domesticated animals has been exceptionally normal since ahead of schedule hundreds of years.

Rent

Renting is actually giving the property to someone else on rent, for a short period of time. The term of the rent continues augmenting, month to month until the parties commonly choose to wind up the agreement. As a rule, the time period of the rent is less than a year. ‘Rental agreement’ is an assent where the states of rent are explained. This agreement can be in written form or in oral form.

Tenant and landlord are the parties related to renting. The proprietor has the privilege to raise the rent or adjust the terms of the contract, by giving earlier notice to the tenant, in composed form. In this way, the organization can employ the asset on rent just when it is required.

Hire

The term hire is used when someone lets other use a thing or property for a very short period of time. For instance: hiring a bike, hiring a cycle, etc. The agreement between the owner and user is usually verbal as the thing is lent for a shorter period of time. The relation between owner and user is based on goodwill and may or may not be formal.

Lease vs. Rent vs. Hire

Here are the some main differences that exist between lease, rent and hire.

Definition

A lease is an agreement to lease an asset, be it a building, land or equipment, for a set time frame and for set installment terms.

Renting is a contract to rent an asset that includes a shorter time period, frequently for less than one year, with the choice to extend after contract ends.

Hiring means to pay for something for temporary use only. There is no legal abiding involved.

Parties

There are two parties in leasing, one is called lessee and other is lessor. Lessor purchases the asset and lessee get the privilege to use that asset against lease rentals.

There are also two parties in renting, one is landlord and other is tenant. Landlord is the owner of asset and tenant use that asset against rent.

There are two parties involved in hiring. One is the owner of article and other is the user.

Time period

Lease is the contract which lasts for a long period of time.

Rent is the agreement which lasts for short period of time.

Hiring is an informal agreement that lasts for a very short interval of time; say a couple of hours.

Main concern

The main concern of lessee is to pay lease rentals to lessor.

The main concern of tenant is to give rent to landlord.

The main concern of hiring is to help somebody as a gesture of goodwill.

Repairing

In leasing, repairing matters depend on the type of leasing contract. When it is a finance lease, lessee bears all the expenses needed for repairing or maintenance. When operating lease is there then all expenses will be borne by lessor.

In renting, all the repairing or maintenance matters and expenses will be borne by landlord.

In hiring, the owner maintains his property or article. But in case of any accident, the user can be asked to contribute in maintenance.

Alteration

No alteration can be done in the lease agreement until and unless it comes to an end.  No terms and conditions can change.

In renting, alteration can be made by the landlord in rental agreement. But before making alteration, landlord has to give notice to the tenant.

No written agreement is followed between the owner and user in hiring.

Renew

In case of leasing, the agreement will not renew automatically.

In case of renting, the agreement will renew automatically.

Offer

In case of leasing, when the contract ends, the lessee gets the offer to purchase the leased asset at the residual price.

In case of renting, no such kind of offer is given to the tenant.

Standards

There are specific accounting standards for the leasing contract.

There are no specific standards for the rental contract.

Conclusion

From the above article, we come to know the main differences that exist between lease and rent. Lease is a contract between lessee and lessor that lasts for a long period and can be modified; whereas rent is a contract between landlord and tenant that lasts for short period and can’t be modified. There are standards for leasing and when leasing contract ends, lessee gets the offer to purchase that asset but no such offers and standards are there in case of renting. Hiring is an activity done as goodwill gesture. It means temporary use of something for a fixed amount.What is better in your opinion?