Difference Between a Lease and a Rental Agreement

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Lease and Rental Agreement

A lease and a rental agreement are the most commonly used terms in the real estate sector. Both are very similar but have a huge difference. To understand those differences, let’s first clarify what is a lease agreement and a rental agreement?


A lease agreement is a contract between a lessor and a lessee that covers the rental of property for an extended period, usually 12 months or longer. The lease agreement is highly specific in terms of describing both parties’ responsibilities throughout the lease and includes all required information to safeguard both parties.

The duration and predetermined rent in a leasing agreement are fixed and cannot be changed during the term of the agreement. This is to ensure that tenants cannot simply leave at any time and that landlords cannot simply raise the rent amount at any time. The lease is simply terminated after the limit has expired. If the lessee wants to keep the lease, it must be renewed.

In the lease agreement, the lessee is responsible for all the maintenance and repairs related to the property. 


A rental agreement is a contract between landlord and tenant, where the landlord gives possession to the tenant of their property or an asset, in exchange for periodic payments in terms of rent. Rental agreements are short-term agreements, usually for 6 months.  It can be changed according to the landlord’s will because no particular standard is followed in the rent agreement.

If there are any damages, the landlord is expected to maintain and restore the property under the rental agreement. Tenants can quit the property if it fails by giving 2 months or a month’s notice. Landlords can also cancel the agreement if tenants fail to meet the expectations of the landlord.


Below is the key difference between a lease agreement and a rental agreement:

Basis For Differences

Lease Agreement

Rental Agreement

Parties involved Lessor and lessee Landlord and tenant
Duration Long-term, usually a year or longer The short- term, usually for 6 months
Responsibilities of maintenance & repair lessee landlord
Accounting standards Based on accounting standard 19 (AS- 19) No accounting standard followed
Modifications No modifications throughout the lease period Can be modified
Offer at expiry When the time is over, the lessee is asked to buy an asset or renew No offers given to tenants by landlords
Taking into consideration Monthly installments Rent is paid monthly/quarterly



Both are distinct, yet to the untrained eye, they appear to be the same. As a result, it is critical to go deeply into and understand the topic. Both have their advantages and disadvantages based on nature.

I hope this information will help you in creating your own agreement. If you are looking for medical office property for lease or have any queries about the same, please contact us. Our team will help you with the best possible solution.

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