In Nigeria, the most common type of rental agreement in today’s rental market is a fixed-term lease that can have a duration of a year or more depending on what is agreed upon between the landlord and tenant. This article analyses the pros and cons of paying rent on a monthly basis (short-term lease).
Earlier this month, Punch reported that Nigerians may start monthly rent payment going by the latest resolution between the federal and state governments on the matter.
According to Punch, the clamour for the monthly payment of rent by clients in the housing sector received attention at the recently concluded sixth meeting of the National Council on Lands, Housing and Urban Development. Albeit is that the way to go?
Fixed-term lease agreements are popular for landlords because they provide a measure of financial consistency by bringing in constant rent. They are popular for tenants because these fixed-term lease agreements provide security by locking in the rent amount for the term which is usually a year of the lease as well as ensuring they cannot be evicted as long as they pay their rent on time.
While fixed-term leases can be very beneficial for tenants and landlords seeking financial and residential security, a month-to-month agreement or short-term lease that is not for a fixed term can be beneficial to landlords and tenants who are seeking flexibility
There are many situations that can arise in which a fixed-term lease might not be the best option, and when these situations arise, paying rent on a monthly basis can be an excellent solution. There are tenants that must constantly move from location to location as required by their employer, and for them, a short-term lease offers a great deal more flexibility over a fixed-term lease.
A short-term lease can also be beneficial for landlords depending on their specific property situation.
Also, vacation properties and properties located in transient prone areas such as college towns can benefit from short-term lease.
While the month-to-month lease is not a perfect fit for all situations, there are definitely many situations for the landlord and tenant where its flexible nature can benefit both.
Most renters sign a standard 12-month lease when renting an apartment, but what does an option of a month-to-month lease portend. This type of lease certainly isn’t right for everyone, but given the right circumstances, it may be exactly be what you need.
Some persons don’t have the capacity to pay annual rent at once, so for those persons, an option to pay rent on a monthly basis would be perfect.
Simply put, some renters prefer shorter-term leases for the sheer flexibility they provide to act on opportunities, including moving for work, family, travel or a better apartment down the street.
There could be a few drawbacks though, month-to-month leases for places that adopt it have proven to be more expensive. Typically, property managers charge more for a short-term lease, so you end up paying more in the short term. If you continue to renew the short-term lease over an extended time period, you’ll definitely be overpaying.
Therefore on the long run, this type of lease won’t pay the layman.
Short-term leases are unstable. The flexibility that renting month-to-month gives you also applies to your landlord. Neither of you are locked into a long-term contract, so there’s nothing preventing your landlord from raising your rent or terminating your lease while you’re living in the apartment.
I should think landlords generally prefer longer apartment leases because it ensures they won’t have to spend money or time turning the unit for the next year.
Each time a tenant moves out, the property owner has to advertise the unit and get it ready for the next tenant, which can include cleaning, painting and fixing any wear and tear.
There is also the potential loss of monthly revenue if the landlord cannot fill the unit quickly. Ultimately, short-term leases are not as cost-effective and are riskier for property managers to offer, which is why you don’t see them as often.
Typically, you’ll see short-term lease options available in markets and neighborhoods where demand is high and supply is limited. With a larger pool of renters than available rental units, landlords in these areas have an easier time handling renter turnover and maintaining occupancy.
As a general rule of thumb, landlords will be more willing to sign a shorterlease in times of rapidly rising rents and will want to lock in longer lease terms in times of flat or declining rents.
The question now is; Short-term lease or long term lease, which would you prefer and why?