How to Choose Between Short-term and Long-term Lease
by on October 30, 2015 | Categories: Real Estate Industry
With the increasing number of people commuting in and out of the city for school or employment, it’s not surprising that condo rental in the Philippines has significantly increased as well. But gone are the days that renters have to stay in a rented condo for a minimum of one year per long-term lease agreement. A lot of condo owners who use their units as rentals have ventured into the short-term lease market, in which they agree to let tenants stay for three months or less. Rather than wait for a long time to find a long-term renter, they would rather take advantage of the renting needs of yuppies or foreigners needing temporary homes to fill in the vacancies.
If you’re planning to look for condos for rent and you’re faced with an option of choosing between short-term and long-term leasing, get to know first the difference between the two before making a decision.
- Lease is for six months or more, and is usually signed directly with a private landlord, who is the condo unit owner. The owner can agree to a shorter stay (up to six months) and still maintain long-term lease terms, depending on the negotiation.
- Security deposit is required. The amount will depend on the landlord but can be open to negotiation. The rental price does not include administration fees and utilities.
- Rented units can be fully or semi-furnished. Before moving in, the renter can be given a document or any proof of turnover protocol that discusses the condition of the unit and an inventory of existing furniture and other items.
- Lease is for three months or less. Security deposit is usually waived for a short-term stay.
- Units are usually fully furnished and ready for moving in. Renters can enjoy the use of basic furniture and utilities of condo living such as TV, washing machine, refrigerator, and internet connection.
- Regular housekeeping can be arranged. In some cases, fresh linen is provided daily, just like in a hotel or serviced apartment.
- Rental price is all inclusive and the tenant does not have to worry about paying utilities and other extra bills.
Whether you’re an employee or student looking for a place closer to work or school, a married couple searching for a starter unit, or a foreigner planning to stay in the country for a while, it’s best to know the pros and cons of these lease agreements in order to choose the best rental for your needs.
Pros and Cons of a Short-term Lease
- It offers more flexibility for the renter. This is definitely a plus for people who really don’t plan to stay in the area for the long term. If you’re a foreigner on a brief vacation or an employee who keeps getting transferred from office to office, renting short-term is a more practical option. This is great for those who have just moved into a city and prefers to get to know the place first before considering permanent residence.
- You can break your lease for little or no extra cash. Since you’re not locked in a long-term agreement, you can easily move out if the need for relocation arises without having to shell out penalty money.
- You can easily negotiate for a long-term agreement if you decide to stay. If your payments are consistent and you’re generally a good tenant, the landlord will not hesitate to convert your lease to a long-term agreement.
- Leases are generally more expensive compared to long-term agreements. Your wallet will definitely feel the pain if you extended your stay and continue paying short-term lease prices.
- The landlord can terminate your lease anytime. He can also take advantage of the flexible terms by offering your unit to another renter to move in once your lease is up. Since you’re not locked in a contract, he can also raise the rent anytime. He can also change the terms of the lease just as easily.
- It can be a dent in your credit score. If you live in a country in which credit score is a big deal, then be prepared for a backlash if you continue to be a short-term renter. This could be a disadvantage when you deal with future landlords since it can be a hazard to have renters who are always on the go.
Pros and Cons of Long-term Lease
- There is rent control. The landlord can’t raise rents within the period of your contract.
- You have to pay your own utilities, which can be a pro or con depending on your usage. If you’re careful with your utilities, you may end up paying less for water and electricity as compared to the inclusive amount that you pay for short-lease.
- The landlord can’t evict you anytime he pleases. Again, the locked-in period works to your advantage here.
- You get to bring your own stuff. You can ask the landlord to hand you an empty unit if you want to use your own furniture and appliances. You can also bargain in terms of paint and other renovations you want for the unit.
- Long-term condos for rent in the Philippines are easier to find compared to short-term ones. Condo owners generally prefer longer leases, even if it means sticking to the rental price and terms of agreement. A long-term lease assures steady rental income for a least a year and they don’t have to worry about constantly finding new tenants. They also want to avoid the hassle of having to advertise, clean, and do repairs on the unit each time a tenant moves out, which they will have to do constantly if they stick to short-term leases. In this case, owners are more open to negotiation in terms of rent and rules for a prospective long-term lease.
Ultimately, your decision will be based on factors such as your planned duration of stay in the area, your flexibility in terms of rental price, and preferred living arrangements. Take these considerations in mind and weigh in the pros and cons before signing a lease agreement.