Differentiate between lease and rent

Let us understand what a lease agreement and a rent agreement are, before learning about their differences.

Lease agreement

According to section 105 of transfer of property Act, 1882 “lease is defined as transfer of a right to enjoy a property, made for a certain time, express or implied or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops/service or any other thing of value, to be rendered periodically or on specific occasions, to the transferor by the transferee, who accepts the transfer on such terms”.

The conditions for rent agreement as a lease are as follows −

  • Landlord has the transfer right to use the property to the tenant.
  • There should be a time limit or agreement made for a particular period.
  • Landlord should receive rent monthly.

Rent agreement

Rent agreement comes under leave and license contracts. It is made for an 11-month period and has no validity under rent control laws.

Rent control laws vary from state to state. According to section 52 of Indian Easements Act, 1882, a leave and license agreement is defined as “where one person grants to another or to a definite number of other persons a right to do or continue to do in or upon the immovable property of the grantor, something which would in the absence of such right be unlawful and such right does not amount to an easement or an interest in the property the right is called a license”.

The conditions for rent agreement as a leave and license agreement are as follows −

  • Nature of the contract is entirely permissive.
  • License cannot be transferred or assigned.
  • Tenants get the right to do something by the landlord.


The major differences between a lease and a rent are as follows −

One party uses another party asset for a certain period.
One party uses another party asset for a limited period with fixed considerations.
Accounting standard – 19.
No particular accounting standard.
Long term duration.
Short term duration.
Lesser and lessee are parties.
Landlord and tenant are parties.
Lease rentals.
Repairs and maintenance will depend on the type of lease.
Repairs and maintenance will be borne by the landlord.
Cannot be modified.
Can be modified.
Lessee gets an offer to buy an asset at the end of lease term.
No offer to buy assets.

Updated on: 08-Jul-2021


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