Renting - AbsoluteAstronomy.com

Renting is an agreement where a payment is made for the temporary use of a good, service or property

Property

Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...

owned by another. A gross lease

Gross lease

In a gross lease, the tenant pays a flat rental amount and the landlord pays for all property charges regularly incurred by the ownership. Most apartment leases are gross leases.-References:...

is when the tenant

Tenement (law)

A tenement , in law, is anything that is held, rather than owned. This usage is a holdover from feudalism, which still forms the basis of all real-estate law in the English-speaking world, in which the monarch alone owned the allodial title to all the land within his kingdom.Under feudalism, land...

pays a flat rental amount and the landlord

Landlord

A landlord is the owner of a house, apartment, condominium, or real estate which is rented or leased to an individual or business, who is called a tenant . When a juristic person is in this position, the term landlord is used. Other terms include lessor and owner...

pays for all property charges regularly incurred by the ownership from landowners. This system is used in case of washing machines to handbags and jewelry.

Reasons for renting

There are many possible reasons for renting instead of buying, for example:

In many jurisdictions (including India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...

, Spain
Spain
Spain , officially the Kingdom of Spain languages]] under the European Charter for Regional or Minority Languages. In each of these, Spain's official name is as follows:;;;;;;), is a country and member state of the European Union located in southwestern Europe on the Iberian Peninsula...

, Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...

, UK and the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

) rent used in a trade
Trade
Trade is the transfer of ownership of goods and services from one person or entity to another. Trade is sometimes loosely called commerce or financial transaction or barter. A network that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and...

or business is tax deductible, whereas rent on a dwelling
Dwelling
Dwelling, as well as being a term for a house, or for living somewhere, or for lingering somewhere, is a philosophical concept which was developed by Martin Heidegger. Dwelling is about making yourself at home where the home itself is a building that is a house...

is not tax deductible in most jurisdictions.
Financial inadequacy, such as renting a house
House
A house is a building or structure that has the ability to be occupied for dwelling by human beings or other creatures. The term house includes many kinds of different dwellings ranging from rudimentary huts of nomadic tribes to free standing individual structures...

when one is unable to buy it. One may not wish to pay the full price that ownership would need, allowing for smaller payments over a specified period of time.
Reducing financial risk due to depreciation
Depreciation
Depreciation refers to two very different but related concepts:# the decrease in value of assets , and# the allocation of the cost of assets to periods in which the assets are used ....

and transaction costs, especially for real estate which might be needed only for a short amount of time.
When something is needed only temporarily, as in the case of a special tool
Tool
A tool is a device that can be used to produce an item or achieve a task, but that is not consumed in the process. Informally the word is also used to describe a procedure or process with a specific purpose. Tools that are used in particular fields or activities may have different designations such...

, a truck
Truck
A truck or lorry is a motor vehicle designed to transport cargo. Trucks vary greatly in size, power, and configuration, with the smallest being mechanically similar to an automobile...

or a skip
Skip (container)
A rubbish skip is usually called merely a skip or waste bin. A skip is a large open-topped container designed for loading onto a special type of lorry. Differing from dumpster, instead of being emptied into a waste vehicle onsite, a skip is replaced by an empty skip and then tipped at a landfill...

.
When something is needed that may or may not be already owned but is not in proximity for use, such as renting an automobile or bicycle when away on a trip.
Needing a cheaper alternative to buying, such as renting a movie: a person is unwilling to pay the full price for a movie, so they rent it for a lesser price, but give up the chance to view it again later.
The renter may want to leave the burden
Burden
-As a surname:*Arthur Scott Burden , American equestrian*Chris Burden, American avant-garde artist*Doug Burden , American rower.*Henry Burden, 19th century industrialist*Jane Morris née Jane Burden , English artists' model...

of upkeep
Maintenance, Repair and Operations
Maintenance, repair, and operations or maintenance, repair, and overhaul involves fixing any sort of mechanical or electrical device should it become out of order or broken...

of the property (mowing the lawn, shoveling snow, etc.) to the owner or his agents.
There is no need to worry about lifespan
Longevity
The word "longevity" is sometimes used as a synonym for "life expectancy" in demography or known as "long life", especially when it concerns someone or something lasting longer than expected ....

and maintenance
Maintenance, Repair and Operations
Maintenance, repair, and operations or maintenance, repair, and overhaul involves fixing any sort of mechanical or electrical device should it become out of order or broken...

.
Renting keeps off-balance-sheet
Off-balance-sheet
Off-balance sheet usually means an asset or debt or financing activity not on the company's balance sheet.Some companies may have significant amounts of off-balance sheet assets and liabilities. For example, financial institutions often offer asset management or brokerage services to their clients...

the debt that would burden the balance sheet
Balance sheet
In financial accounting, a balance sheet or statement of financial position is a summary of the financial balances of a sole proprietorship, a business partnership or a company. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A...

of a company in case the property would have been bought.
Renting can be better for the environment if products are used more efficiently by sharing rather than being disposed of or overproduced.

Growth of rental industry

Short-term rental of all sorts of products (excluding real estate and holiday apartments) already represents an estimated €108 billion ($160 billion) annual market in Europe and is expected to grow further as the internet makes it easier to find specific items available for rent. According to a poll by YouGov

YouGov

YouGov, formerly known as PollingPoint in the United States, is an international internet-based market research firm launched in the UK in May 2000 by Stephan Shakespeare, now Chief Executive Officer, and Nadhim Zahawi...

, 76% of people looking to rent would go to the internet first to find what they need; rising to 88% for those aged 25–34.

It has been widely reported that the financial crisis of 2007–2010 may have contributed to the rapid growth of online rental marketplaces, such as erento

Erento

erento is an online rental marketplace. It brings together businesses with products or services to hire out with customers wanting to rent them...

, as consumers are more likely to consider renting instead of buying in times of financial hardship. Environmental concerns, fast depreciation of goods, and a more transient workforce also mean that consumers are increasingly searching for rentals online.

A 2010 U.S. survey found 27% of renters plan to never buy a home.

Rental agreements

There is typically an implied, explicit, or written rental agreement or contract

Contract

A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...

involved to specify the terms of the rental, which are regulated and managed under contract law. Examples include:

Renting real estate
Real estate
In general use, esp. North American, 'real estate' is taken to mean "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; an item of real property; buildings or...

(real property) for the purpose of housing tenure
Housing tenure
Housing tenure refers to the financial arrangements under which someone has the right to live in a house or apartment. The most frequent forms are tenancy, in which rent is paid to a landlord, and owner occupancy. Mixed forms of tenure are also possible....

(where the lessee rents a residence to live in), parking
Parking
Parking is the act of stopping a vehicle and leaving it unoccupied for more than a brief time. Parking on one or both sides of a road is commonly permitted, though often with restrictions...

space for a vehicle(s), storage space, whole or portions of properties for business, agricultural, institutional, or government use, or other reasons.

When renting real estate, the person(s) or party who lives in or occupies the real estate is often called a tenant
Leasehold estate
A leasehold estate is an ownership of a temporary right to land or property in which a lessee or a tenant holds rights of real property by some form of title from a lessor or landlord....

, paying rent to the owner of the property, the lessor, often called a landlord
Landlord
A landlord is the owner of a house, apartment, condominium, or real estate which is rented or leased to an individual or business, who is called a tenant . When a juristic person is in this position, the term landlord is used. Other terms include lessor and owner...

(or landlady). The real estate rented may be all or part of almost any real estate, such as an apartment
Apartment
An apartment or flat is a self-contained housing unit that occupies only part of a building...

, house
House
A house is a building or structure that has the ability to be occupied for dwelling by human beings or other creatures. The term house includes many kinds of different dwellings ranging from rudimentary huts of nomadic tribes to free standing individual structures...

, building
Building
In architecture, construction, engineering, real estate development and technology the word building may refer to one of the following:...

, business office(s) or suite, land, farm, or merely an inside or outside space to park a vehicle, or store things all under Real estate law.

The rental agreement for real estate is often called a lease
Lease
A lease is a contractual arrangement calling for the lessee to pay the lessor for use of an asset. A rental agreement is a lease in which the asset is tangible property...

, and usually involves specific property rights in real property
Real property
In English Common Law, real property, real estate, realty, or immovable property is any subset of land that has been legally defined and the improvements to it made by human efforts: any buildings, machinery, wells, dams, ponds, mines, canals, roads, various property rights, and so forth...

, as opposed to chattels.
In India, the rental income on property is taxed under the head "income from house property". A deduction of 30 % is allowed from total rent which is charged to tax.

The time use of a chattel or other so called "personal property" is covered under general contract law, but the term lease also nowadays extends to long term rental contracts of more expensive non-Real properties such as automobiles, boats, planes, office equipment and so forth. The distinction in that case is long term versus short term rentals. Some non-real properties commonly available for rent or lease are:

motion pictures on VHS
VHS
The Video Home System is a consumer-level analog recording videocassette standard developed by Victor Company of Japan ....

or DVD
DVD
A DVD is an optical disc storage media format, invented and developed by Philips, Sony, Toshiba, and Panasonic in 1995. DVDs offer higher storage capacity than Compact Discs while having the same dimensions....

, of audio CD
Compact Disc
The Compact Disc is an optical disc used to store digital data. It was originally developed to store and playback sound recordings exclusively, but later expanded to encompass data storage , write-once audio and data storage , rewritable media , Video Compact Discs , Super Video Compact Discs ,...

s, of computer program
Computer program
A computer program is a sequence of instructions written to perform a specified task with a computer. A computer requires programs to function, typically executing the program's instructions in a central processor. The program has an executable form that the computer can use directly to execute...

s on CD-ROM
CD-ROM
A CD-ROM is a pre-pressed compact disc that contains data accessible to, but not writable by, a computer for data storage and music playback. The 1985 “Yellow Book” standard developed by Sony and Philips adapted the format to hold any form of binary data....

.
transport
Transport
Transport or transportation is the movement of people, cattle, animals and goods from one location to another. Modes of transport include air, rail, road, water, cable, pipeline, and space. The field can be divided into infrastructure, vehicles, and operations...

equipment, such as an automobile
Automobile
An automobile, autocar, motor car or car is a wheeled motor vehicle used for transporting passengers, which also carries its own engine or motor...

or a bicycle
Bicycle
A bicycle, also known as a bike, pushbike or cycle, is a human-powered, pedal-driven, single-track vehicle, having two wheels attached to a frame, one behind the other. A person who rides a bicycle is called a cyclist, or bicyclist....

.
ships and boats, in which case rental is known as chartering
Chartering (shipping)
Chartering is an activity within the shipping industry. In some cases a charterer may own cargo and employ a shipbroker to find a ship to deliver the cargo for a certain price, called freight rate. Freight rates may be on a per-ton basis over a certain route or alternatively may be expressed in...

, and the rent is known as hire or freight (depending on the type of charter)
aircraft, in which case rental is known as chartering
Air charter
Air charter is the business of renting an entire aircraft as opposed to individual aircraft seats...

, or leasing if the rental is longer term
specialized tool
Tool
A tool is a device that can be used to produce an item or achieve a task, but that is not consumed in the process. Informally the word is also used to describe a procedure or process with a specific purpose. Tools that are used in particular fields or activities may have different designations such...

s, such as a chainsaw
Chainsaw
A chainsaw is a portable mechanical saw, powered by electricity, compressed air, hydraulic power, or most commonly a two-stroke engine...

, laptop, IT equipment or something more substantial, such as a forklift.
Large equipment such as cranes, oil rigs and submarines.
a deckchair
Deckchair
A deckchair is a folding chair, usually with a frame of treated wood or artificial material and a fabric or vinyl backrest and seat. It may have an extended seat, meant to be used as a leg rest, whose height may be adjustable...

or beach chair and umbrella
Umbrella
An umbrella or parasol is a canopy designed to protect against rain or sunlight. The term parasol usually refers to an item designed to protect from the sun; umbrella refers to a device more suited to protect from rain...

.
Furniture
Furniture
Furniture is the mass noun for the movable objects intended to support various human activities such as seating and sleeping in beds, to hold objects at a convenient height for work using horizontal surfaces above the ground, or to store things...
Designer handbags, jewelry, sunglasses and watches.

In various degrees, renting can involve buying services for various amounts of time, such as staying in a hotel

Hotel

A hotel is an establishment that provides paid lodging on a short-term basis. The provision of basic accommodation, in times past, consisting only of a room with a bed, a cupboard, a small table and a washstand has largely been replaced by rooms with modern facilities, including en-suite bathrooms...

, using a computer

Computer

A computer is a programmable machine designed to sequentially and automatically carry out a sequence of arithmetic or logical operations. The particular sequence of operations can be changed readily, allowing the computer to solve more than one kind of problem...

in an Internet cafe

Internet cafe

An Internet café or cybercafé is a place which provides internet access to the public, usually for a fee. These businesses usually provide snacks and drinks, hence the café in the name...

, or riding in a taxicab

Taxicab

A taxicab, also taxi or cab, is a type of vehicle for hire with a driver, used by a single passenger or small group of passengers, often for a non-shared ride. A taxicab conveys passengers between locations of their choice...

(some forms of English use the term "hiring" for this activity).

As seen from the examples, some rented goods are used on the spot, but usually they are taken along; to help guarantee that they are brought back, one or more of the following applies:

one shows an identity document
Identity document
An identity document is any document which may be used to verify aspects of a person's personal identity. If issued in the form of a small, mostly standard-sized card, it is usually called an identity card...
one signs a contract
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...

; any damage already present when renting may be noted down to avoid that the renter is blamed for it when the good is returned
one pays a damage deposit
Damage deposit
A damage deposit or deposit is a sum of money paid in relation to a rented item to ensure it is returned in good condition. They are particularly common in relation to rented accommodation, where they may also be referred to as a tenancy deposit or in some places a bond.The owner of the item will...

(a refundable fee that may be used in part to pay for damage caused by the renter)
if the customer has a credit account with the rental company, they may rent over several months (or years) and will receive a recurring or continuation invoice each rental period until they return the equipment. In this case deposits are rarely required.
In certain types of rental (sometimes known as operated or wet rental)
Operated equipment rental
Operated Equipment Rental is the term used for the rental of large or complex machinery where the rental company supplies an operator or driver to operate the machinery. This is also sometimes referred to as Wet Rental , and Operated Plant...

the charge may be calculated by the rental charge + timesheets of operators or drivers supplied by the rental company to operate the equipment. This is particularly relevant for crane rental companies.

Sometimes the risk that the good is kept is reduced by it being a special model or having signs on it that cannot easily be removed, making it obvious that it is owned by the rental company; this is especially effective for goods used in public places, but even when used at home it may help due to social control.

Persons and businesses that regularly rent goods from a particular company generally have an account with that company, which reduces the administrative procedure (transaction costs) on each occasion.

Signing out book

Book

A book is a set or collection of written, printed, illustrated, or blank sheets, made of hot lava, paper, parchment, or other materials, usually fastened together to hinge at one side. A single sheet within a book is called a leaf or leaflet, and each side of a leaf is called a page...

s from a library

Library

In a traditional sense, a library is a large collection of books, and can refer to the place in which the collection is housed. Today, the term can refer to any collection, including digital sources, resources, and services...

could be considered renting when there is a fee per book. However the term lending is more common.

Leasing

Long term rental of personal property (for periods longer than a year) is known as leasing. Leasing is usually used for high-value capital equipment, both in business and by consumers (particularly for cars). A leasing agreement which transfers most of the risks and rewards of ownership, usually for the life of the asset, is known as a finance lease

Finance lease

A finance lease or capital lease is a type of lease. It is a commercial arrangement where:* the lessee will select an asset ;* the lessor will purchase that asset;...

. A leasing agreement which is not a finance lease is known as an operating lease.

Rent to own

A rental agreement may provide for the renter or lessee to become the owner of the asset at the end of the rental period, usually at the renter's option on payment of a nominal fee. Such arrangements may be known as

rent-to-own, a term used in the United States for rental of furniture or appliances. The term is also used in the U.S. for real estate transactions, where the lessee has an option to purchase the property at a fixed price at a specified future time. Such arrangements are also known as lease-option, lease-to-own or lease to purchase option.
hire purchase
Hire purchase
Hire purchase is the legal term for a contract, in this persons usually agree to pay for goods in parts or a percentage at a time. It was developed in the United Kingdom and can now be found in China, Japan, Malaysia, India, South Africa, Australia, Jamaica and New Zealand. It is also called...

, used in the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

and other countries for the purchase of cars, other consumer equipment and business equipment. The term lease-purchase is also used.
closed-end leasing
Closed-end leasing
Closed-end leasing is a contract-based system governed by law in the U.S. and Canada. It allows a person the use of property for a fixed term, and the right to buy that property for the agreed residual value when the term expires....

, used in the U.S. and Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...

for the leasing of cars. Unlike in hire purchase, the asset is sold at its residual value
Residual value
Residual value is one of the constituents of a leasing calculus or operation. It describes the future value of a good in terms of percentage of depreciation of its initial value....

at the end of the term, rather than for a nominal amount.

External links

Rent vs Buy (homes) NY Times