Before we go on an in-depth understanding of the differences between renting out spaces on a short term and vice versa, let us look at what a lease is. A lease is an agreement between two parties where a land, property or services are conveyed for a specific amount of time, for a specific amount of money.
That being said, it’s easier to understand that a lease of over 6 months normally isn’t considered short term. While landlords offer short term leases most of the time, long term leases mean security of rental income passively earned. Let’s delve on some other factors they consider to set one from the other.
- When there is a great demand for space within a vicinity because it’s accessible to transportation, tourist spots, schools or the metropolis, landlords prefer to offer a month-to-month lease than long term ones because it provides an opportunity for a huge pool of renters willing to pay money for the convenience. A good example would be hostels for tourists in Hong Kong. Their hostels have very limited space but it’s basically near every 7-11 the country has and the MTR is always accessible by foot. When you go out, there’s food stalls, noodle houses and barbecue alleyways where there’s pearl milk tea stall at every corner. The landlords know how tourists cram for easy accommodations like this. And so, long term leases are not in the cards for them.
- There is also the tendency for landlords to agree on short term leases or venue hires when rents are going up like with that property in Bali which was used in the movie, “Eat, Pray, Love” and in Thailand where so many tourists come and visit for leisure. It ensures landlords of a rent increase with each new lease.
- Short term leases are much preferred when a tenant’s employment lasts not more than 6 months leaving them uninterested for a long term lease. Although this is not really the kind of information that needs to be disclosed to a landlord, the agreement favours the tenant extensively if no increase in the rental fee for the specific period of time will be imposed. This can also happen in the case of when the property is let out to be hired by corporate functions or events, but those companies that enter the contract on a fixed terms basis and not causal. Regardless of the frequency of these functions, a fixed amount has to be paid to the landlord monthly through the duration of the contract.
- Any financial issues a tenant might have may lead a tenant to consider setting down a contract with a landlord for 6 months. While again, the landlord doesn’t need to know that, unless it’s reflected by a trend from the last 3 bank statements a tenant has, it still is what should be preferred for the sake of both parties.
- A prospective travel itinerary called “may-fly-out-anytime” could affect a tenant’s decision to go for a long-term lease. While it is again the tenant’s discretion if he/she should disclose such information to the landlord, both parties could be saved from hassle like the case in number four with a little bit of honesty from the tenant’s side.
- While tenants have their own reservations, landlords do too. This information is probably one for the books that are often a landlord’s deed. While the real owner of the house leaves and assigns the landlord you know to “just” look after it instead of having the right to put it out for lease. Still, he/she does so to secretly earn from it. The real owner may come anytime and use the place so the landlord just puts it out for the short term.
- Trends fluctuate and the market may change overnight. If space is of shortage today and is on a landlord’s favour, it could turn the opposite way and may catch him or her off-guard. What he/she would do is that instead of going for the short lease as planned, the landlord will extend for a long term to avoid months of non-occupancy which means zero income in between the months of looking for new tenants. Vacancies are money lost, period.
At the end of the day, it’s better to lay out the real deal in terms of the amount of time you’re sure you’ll spend time needing the place, and your budget. Be out front with your demand and be willing to compromise. An agreement would not come upon if both parties didn’t come to a close. Make sure you’re holding an original copy of a signed agreement so that when all else fails, you have that as the basis of the terms and conditions of the lease.