From Wikipedia, the free encyclopedia
  (Redirected from Rental)
Jump to: navigation, search
This article is about an agreement for payment for temporary use. For other uses, see Rent (disambiguation).
"Rentals" redirects here. For the rock band, see The Rentals.
"Renter" redirects here. For the Estonian economist and chess player, see Raul Renter.

Renting, also known as hiring or letting, is an agreement where a payment is made for the temporary use of a good, service or property owned by another. A gross lease is when the tenant pays a flat rental amount and the landlord pays for all property charges regularly incurred by the ownership.

Reasons for renting[edit]


  • In many jurisdictions (including India, Spain, Australia, United Kingdom and the United States) rent used in a trade or business is tax deductible, whereas rent on a dwelling is not tax deductible in most jurisdictions.
  • Financial inadequacy, such as renting a house 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 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, a truck or a skip.
  • The tenant may want to leave the burden of upkeep of the property (mowing the lawn, shovelling snow, etc.) to the owner or his agents.
  • There is no need to worry about lifespan and maintenance.
  • Renting keeps off-balance-sheet the debt that would burden the balance sheet 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.[1]

Growth of rental industry[edit]


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, as consumers are more likely to consider renting instead of buying in times of financial hardship.[4] Environmental concerns, fast depreciation of goods, and a more transient workforce also mean that consumers are increasingly searching for rentals online.[2]

A 2010 US survey found 27% of renters plan to never buy a home.[5]

Rental investment[edit]


Rental agreements[edit]

There is typically an implied, explicit, or written rental agreement or contract involved to specify the terms of the rental, which are regulated and managed under contract law.

Examples include letting out real estate (real property) for the purpose of housing tenure (where the tenant rents a residence to live in), parking 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, paying rent to the owner of the property, often called a landlord (or landlady). The real estate rented may be all or part of almost any real estate, such as an apartment, house, building, 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.


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:

In various degrees, renting can involve buying services for various amounts of time, such as staying in a hotel, using a computer in an Internet cafe, or riding in a taxicab (some forms of English use the term "hiring" for this activity).


  • one shows an identity document
  • one signs a contract; 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 (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) 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.


Signing out books from a library could be considered renting when there is a fee per book. However the term lending is more common.


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

Rent to own[edit]

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 US for real estate transactions, where the tenant 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, used in the UK and other countries for the purchase of cars, other consumer equipment and business equipment. The term lease-purchase is also used.
  • closed-end leasing, used in the US and Canada for the leasing of cars. Unlike in hire purchase, the asset is sold at its residual value at the end of the term, rather than for a nominal amount.


  1. ^ "Why buy it when you can rent it?", The Observer, 2004-06-27. Retrieved on 2009-09-09.
  2. ^ a b Schenker, Jennifer. "Tough Times? Rent, Don't Buy, with Erento", BusinessWeek, 2008-08-22. Retrieved on 2009-10-01.
  3. ^ Pollok, Murray. News Highlights, International Rental News, 2009-04-01. Retrieved on 2009-09-01.
  4. ^ Moshiri, Maryam. "Is renting the new buying?", BBC Breakfast News, 2009-04-27. Retrieved on 2009-05-01.
  5. ^ Boston Metro, 19 August 2010, p 6. Citing survey by
  6. ^ Tara Siegel Barnard (March 29, 2013). "Rental Investment May Seem Safer Than It Really Is". The New York Times. Retrieved March 30, 2013. 
  7. ^ a b "If you want it, rent it ... from a 'must have' handbag to an Aston Martin", The Observer, 2009-01-04. Retrieved on 2009-09-09.

External links[edit]