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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 Property is a system of rights that gives people legal control of valuable things, and also refers to the valuable things themselves. Depending on the nature of the property, an owner of property may have the right to consume, alter, share, r ...
owned by another. A
gross lease A gross lease is a type of commercial where the tenant pays a flat rental amount, and the pays for all operating expenses regularly incurred by the ownership, including taxes, electricity and water. Most leases resemble gross leases. The term "g ...
is when the tenant pays a flat rental amount and the
landlord A landlord is the owner of a house A house is a single-unit residential building A building, or edifice, is a structure with a roof and walls standing more or less permanently in one place, such as a house or factory. Buildings come in a ...
pays for all property charges regularly incurred by the ownership. An example of renting is
equipment rental Equipment rental, also called plant hire in some countries (in the UK for instance), is a service industry The tertiary sector of the economy, generally known as the service sector, is the third of the three economic sectors of the three-sect ...
. Renting can be an example of the
sharing economy In capitalism Capitalism is an economic system An economic system, or economic order, is a system A system is a group of interacting Interaction is a kind of action that occurs as two or more objects have an effect upon one ano ...
.


Reasons for renting

There are many possible reasons for renting instead of buying, for example: *In many jurisdictions (including
India India, officially the Republic of India (Hindi Hindi (Devanagari: , हिंदी, ISO 15919, ISO: ), or more precisely Modern Standard Hindi (Devanagari: , ISO 15919, ISO: ), is an Indo-Aryan language spoken chiefly in Hindi Belt, ...

India
,
Spain , image_flag = Bandera de España.svg , image_coat = Escudo de España (mazonado).svg , national_motto = , national_anthem = , image_map = , map_caption = , image_map2 ...

Spain
,
Australia Australia, officially the Commonwealth of Australia, is a Sovereign state, sovereign country comprising the mainland of the Australia (continent), Australian continent, the island of Tasmania, and numerous List of islands of Australia, sma ...

Australia
,
United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain,Usage is mixed. The Guardian' and Telegraph' use Britain as a synonym for the United Kingdom. Some prefer to use Britain as shorth ...

United Kingdom
and the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...

United States
) rent paid in a
trade Trade involves the transfer of goods from one person or entity to another, often in exchange for money. Economists refer to a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of r ...

trade
or business is
tax deductible Tax deduction is a reduction of income that is able to be tax A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity In law, a legal person is any person A person (plural p ...
, whereas rent on a
dwelling In law, a dwelling (also known as a residence or an abode) is a self-contained unit of accommodation used by one or more households A household consists of one or several persons who live in the same dwelling and share meals. It may also co ...

dwelling
is not tax-deductible in most jurisdictions. *Financial inadequacy, such as renting a
house A house is a single-unit residential building A building, or edifice, is a structure with a roof and walls standing more or less permanently in one place, such as a house A house is a single-unit residential building, which may range ...

house
when one is unable to purchase, i.e "renting by necessity". *Reducing financial risk due to
depreciation In accountancy, depreciation refers to two aspects of the same concept: first, the actual decrease of fair value of an asset, such as the decrease in value of factory equipment each year as it is used and wear, and second, the allocation in a ...

depreciation
and
transaction costs In economics Economics () is a social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviou ...
, 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 tool is an object that can extend an individual's ability to modify features of the surrounding environment. Although many animals use tool use by animals, simple tools, only human beings, whose use of stone tools dates back Paleolithic, hun ...

tool
, a
truck A truck or lorry is a motor vehicle A motor vehicle, also known as motorized vehicle or automotive vehicle, is a self-propelled vehicle A vehicle (from la, vehiculum) is a machine that transports people or cargo. Vehicles include ...

truck
or a
skip Skip or Skips may refer to: Acronyms * SKIP Skip or Skips may refer to: Acronyms * SKIP Skip or Skips may refer to: Acronyms * SKIP (Skeletal muscle and kidney enriched inositol phosphatase), a human gene * Simple Key-Management for ...
. *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 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
lifespan
and
maintenance Maintenance may refer to: Biological science * Maintenance of an organism * Maintenance respiration Non-technical maintenance * Alimony, also called ''maintenance'' in British English * Champerty and maintenance, two related legal doctrines ...
. *Renting keeps
off-balance-sheet Off-balance sheet (OBS), or incognito leverage, usually means an asset In financial accounting Financial accounting is the field of accounting Accounting or Accountancy is the measurement, processing, and communication of financial and n ...
the debt that would burden the
balance sheet In financial accounting Financial accounting is the field of accounting Accounting or Accountancy is the measurement, processing, and communication of financial and non financial information about economic entity, economic entities such ...

balance sheet
of a company in case the property would have been bought. *Renting is good for the environment if products are used more efficiently by maximizing utility rather than being disposed of, overproduced and underutilized. *Risks aside, renting has the potential to generate a regular stream of revenue for the owner. The more the churn (the number of times the item is rented out) the higher the income. Eventually, the rental income crosses the product procurement value and every churn post that becomes a profit for the owner *Renting often also becomes an alternate revenue pool for idle inventory vs. overly depending on a stagnant / slowing retailing business environment


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.Schenker, Jennifer
"Tough Times? Rent, Don't Buy, with Erento"
''
BusinessWeek ''Bloomberg Businessweek'', previously known as ''BusinessWeek'', is an American weekly business magazine, published 50 times a year. Since 2009, the magazine is owned by New York City New York, often called New York City to distinguish i ...
'', 2008-08-22. Retrieved on 2009-10-01.
According to a poll by
YouGov YouGov is a British international Internet The Internet (or internet) is the global system of interconnected s that uses the (TCP/IP) to communicate between networks and devices. It is a ' that consists of private, public, academic, ...

YouGov
, 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 Finance is a term for the management, creation, and study of money Image:National-Debt-Gillray.jpeg, In a 1786 James Gillray caricature, the plentiful money bags handed to King George III are contrasted with the beggar whose legs and arms w ...
may have contributed to the rapid growth of online rental marketplaces, such as
erento erento is the largest online rental marketplace A market, or marketplace, is a location where people regularly go to gather for the purchase and sale of provisions, livestock, and other goods. In different parts of the world, a market ...
, 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 US survey found 27% of renters plan to never buy a home.''Boston Metro'', 19 August 2010, p 6. Citing survey by Trulia.com.


Rental investment

Net income received, or losses suffered, by an investor from renting of properties is subject to idiosyncratic risk due to the numerous things that can happen to real property and variable behavior of tenants.


Rental agreements

There is typically an implied, explicit, or written
rental agreement A rental agreement is a contract A contract is a legally binding document between at least two parties that defines and governs the rights and duties of the parties to an agreement. A contract is legally enforceable because it meets the requir ...
or
contract A contract is a legally binding agreement that defines and governs the rights and duties between or among its parties Image:'Hip, Hip, Hurrah! Artist Festival at Skagen', by Peder Severin Krøyer (1888) Demisted with DXO PhotoLab Clearview ...

contract
involved to specify the terms of the rental, which are regulated and managed under
contract law A contract is a legally binding agreement that defines and governs the rights and duties between or among its parties Image:'Hip, Hip, Hurrah! Artist Festival at Skagen', by Peder Severin Krøyer (1888) Demisted with DXO PhotoLab Clearview ...
. Examples include letting out
real estate Real estate is 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 (also) an item of real property, (more genera ...

real estate
(real property) for the purpose of
housing tenure Housing tenure refers to the financial arrangements under which someone has the right to live in a house A house is a single-unit residential building A building, or edifice, is a structure with a roof and walls standing more or less per ...
(where the tenant rents a residence to live in),
parking Parking is the act of stopping and disengaging a vehicle and leaving it unoccupied. Parking on one or both sides of a road is often permitted, though sometimes with restrictions. Some buildings have parking facilities for use of the buildings' ...

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 A landlord is the owner of a house A house is a single-unit residential building A building, or edifice, is a structure with a roof and walls standing more or less permanently in one place, such as a house or factory. Buildings come in a ...
(or landlady). The real estate rented may be all or part of almost any real estate, such as an
apartment An apartment (American English American English (AmE, AE, AmEng, USEng, en-US), sometimes called United States English or U.S. English, is the set of variety (linguistics), varieties of the English language native to the United S ...

apartment
,
house A house is a single-unit residential building A building, or edifice, is a structure with a roof and walls standing more or less permanently in one place, such as a house A house is a single-unit residential building, which may range ...

house
,
building A building, or edifice, is a structure with a roof and walls standing more or less permanently in one place, such as a house or factory. Buildings come in a variety of sizes, shapes, and functions, and have been adapted throughout history for a ...

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 Real estate is property consisting of land and the buildings on it, along with its natural resource Natural resources are resource Resource refers to all the materials available in our environment which help us to satisfy our needs a ...
. The tenancy agreement for real estate is often called a
lease A lease is a contractual arrangement calling for the user (referred to as the ''lessee'') to pay the owner (the Lessor (leasing), ''lessor'') for use of an asset. Property, buildings and vehicles are common assets that are leased. Industrial o ...

lease
, and usually involves specific property rights in
real property In English English usually refers to: * English language English is a West Germanic languages, West Germanic language first spoken in History of Anglo-Saxon England, early medieval England, which has eventually become the World la ...
, 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 A contract is a legally binding agreement that defines and governs the rights and duties between or among its parties Image:'Hip, Hip, Hurrah! Artist Festival at Skagen', by Peder Severin Krøyer (1888) Demisted with DXO PhotoLab Clearview ...
, 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 picture A film, also called a movie, motion picture or moving picture, is a work of visual art The visual arts are art forms such as painting Painting is the practice of applying paint Paint is any pigmented liquid, liquefiable, o ...
s on
VHS VHS (Video Home System) is a for consumer-level on tape . From the 1950s, video recording became a major contributor to the television industry, via the first commercialized s (VTRs). At that time, the expensive devices were used only i ...

VHS
or
DVD The DVD (common abbreviation for Digital Video Disc or Digital Versatile Disc) is a digital Digital usually refers to something using digits, particularly binary digits. Technology and computing Hardware *Digital electronics Digital elect ...

DVD
, of
audio CD Compact Disc Digital Audio (CDDA or CD-DA), also known as Digital Audio Compact Disc or simply as Audio CD, is the standardization, standard format for audio compact discs. The standard is defined in the ''Red Book'', one of a series of Rainbow ...

audio CD
s, of
computer program In imperative programming, a computer program is a sequence of instructions in a programming language that a computer can execute or interpret. In declarative programming, a ''computer program'' is a Set (mathematics), set of instructions. A comp ...
s on
CD-ROM A CD-ROM (, compact disc read-only memory) is a pre-pressed optical compact disc The compact disc (CD) is a digital Digital usually refers to something using digits, particularly binary digits. Technology and computing Hardware *Digital ...

CD-ROM
. *
transport Transport (in British English British English (BrE) is the standard dialect A standard language (also standard variety, standard dialect, and standard) is a language variety that has undergone substantial codification of grammar and ...

transport
equipment, such as an
automobile A car (or automobile) is a wheeled motor vehicle A motor vehicle, also known as motorized vehicle or automotive vehicle, is a self-propelled vehicle, commonly wheeled, that does not operate on Track (rail transport), rails (such as trains o ...

automobile
or a
bicycle A bicycle, also called a bike or cycle, is a human-powered transport, human-powered or motorized bicycle, motor-powered, bicycle pedal, pedal-driven, single-track vehicle, having two bicycle wheel, wheels attached to a bicycle frame, frame, ...

bicycle
. *ships and boats, in which case rental is known as chartering, and the rent is known as ''hire'' or ''freight'' (depending on the type of charter) *aircraft, in which case rental is known as chartering, or
leasing A lease is a contract A contract is a legally binding document between at least two parties that defines and governs the rights and duties of the parties to an agreement. A contract is legally enforceable because it meets the requirements and ...
if the rental is longer term *specialized
tool A tool is an object that can extend an individual's ability to modify features of the surrounding environment. Although many animals use tool use by animals, simple tools, only human beings, whose use of stone tools dates back Paleolithic, hun ...

tool
s, such as a
chainsaw A chainsaw (or chain saw) is a portable gasoline-, electric-, or battery-powered saw that cuts with a set of teeth attached to a rotating chain driven along a guide bar. It is used in activities such as tree felling, limbing, Log bucking, bucki ...
, laptop, IT equipment or something more substantial, such as a
forklift A forklift (also called lift truck, jitney, fork truck, fork hoist, and forklift truck) is a powered industrial truck used to lift and move materials over short distances. The forklift was developed in the early 20th century by various companie ...

forklift
. *large equipment such as cranes, oil rigs and submarines. *a
deckchair A deckchair (or deck chair) is a folding chair, usually with a frame of treated wood or other material. The term now usually denotes a portable folding chair, with a single strip of Textile, fabric or Polyvinyl chloride, vinyl forming the backre ...
or beach chair and
umbrella An umbrella or parasol is a folding canopy (building), canopy supported by wooden or metal ribs that is usually mounted on a wooden, metal, or plastic pole. It is designed to protect a person against rain or sunburn, sunlight. The term ''umbrell ...

umbrella
. *
furniture Furniture refers to movable objects intended to support various human activities such as seating (e.g., chairs, stools, and sofas), eating (table (furniture), tables), and sleeping (e.g., beds). Furniture is also used to hold objects at a con ...

furniture
*designer handbags, jewelry,"If you want it, rent it ... from a 'must have' handbag to an Aston Martin"
''
The Observer ''The Observer'' is a British newspaper published on Sundays. In the same place on the political spectrum A political spectrum is a system to characterize and classify different in relation to one another. These positions sit upon one ...

The Observer
'', 2009-01-04. Retrieved on 2009-09-09.
sunglasses and watches. *Home appliances such as
washing machine A washing machine (laundry machine, clothes washer, or washer) is a home appliance A home appliance, also referred to as a domestic appliance, an electric appliance or a household appliance, is a machine which assists in household A house ...

washing machine
s,
refrigerator A refrigerator (colloquially fridge) is a commercial and home appliance A home appliance, also referred to as a domestic appliance, an electric appliance or a household appliance, is a machine which assists in household A household co ...

refrigerator
s,
television Television, sometimes shortened to TV or telly, is a telecommunication Telecommunication is the transmission of information by various types of technologies over wire A wire is a single usually cylindrical A cylinder (from Gre ...

television
s,
microwave oven A microwave oven (commonly referred to as a microwave) is an electric oven upA double oven A ceramic oven An oven is a tool A tool is an object that can extend an individual's ability to modify features of the surrounding environment. ...

microwave oven
s, and air-conditioning units In various degrees, renting can involve buying services for various amounts of time, such as staying in a
hotel A hotel is an establishment that provides paid lodging on a short-term basis. Facilities provided inside a hotel room may range from a modest-quality mattress in a small room to large suites with bigger, higher-quality beds, a dresser, a ref ...

hotel
, using a
computer A computer is a machine that can be programmed to Execution (computing), carry out sequences of arithmetic or logical operations automatically. Modern computers can perform generic sets of operations known as Computer program, programs. These ...

computer
in an
Internet cafe The Internet (or internet) is the global system of interconnected computer networks that uses the Internet protocol suite (TCP/IP) to communicate between networks and devices. It is a ''internetworking, network of networks'' that consists ...

Internet cafe
, or riding in a
taxicab#REDIRECT Taxi A taxicab, also known as a taxi or a 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 the ...
(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 Guarantee is a legal term more comprehensive and of higher import than either warranty or "security". It most commonly designates a private transaction by means of which one person, to obtain some trust, confidence or credit for another, engages ...
that they are brought back, one or more of the following applies: *one shows an
identity document An identity document (also called a piece of identification or ID, or colloquially as papers) is any document A document is a writing, written, drawing, drawn, presented, or memorialized representation of thought, often the manifestation o ...
*one signs a
contract A contract is a legally binding agreement that defines and governs the rights and duties between or among its parties Image:'Hip, Hip, Hurrah! Artist Festival at Skagen', by Peder Severin Krøyer (1888) Demisted with DXO PhotoLab Clearview ...

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 depositA damage deposit or deposit is a sum of money paid in relation to a renting, rented item to ensure it is returned in good condition. They are particularly common in relation to rented lodging, accommodation, where they may also be referred to as a te ...
(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. 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 In economics Economics () is a social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviou ...
) on each occasion. Signing out
book A book is a medium for recording information Information is processed, organised and structured data Data (; ) are individual facts, statistics, or items of information, often numeric. In a more technical sense, data are a set of v ...

book
s from a
library A library is a collection of materials, books or media that are easily accessible for use and not just for display purposes. It is responsible for housing updated information in order to meet the user's needs on a daily basis. A library provi ...

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


Leasing

Rental of
personal property Personal property is property Property is a system of rights that gives people legal control of valuable things, and also refers to the valuable things themselves. Depending on the nature of the property, an owner of property may have the ...
or
real property In English English usually refers to: * English language English is a West Germanic languages, West Germanic language first spoken in History of Anglo-Saxon England, early medieval England, which has eventually become the World la ...
for periods longer than a year, which is governed by the signing of a
lease A lease is a contractual arrangement calling for the user (referred to as the ''lessee'') to pay the owner (the Lessor (leasing), ''lessor'') for use of an asset. Property, buildings and vehicles are common assets that are leased. Industrial o ...

lease
, is known as leasing. Leasing is usually used for high-value capital equipment, both in business and by consumers. A lease in which the renter benefits from an increase in value of the asset is known as a
finance leaseA finance lease (also known as a capital lease or a sales lease) is a type of lease A lease is a contractual arrangement calling for the lessee (user) to pay the Lessor (leasing), lessor (owner) for use of an asset. Property, buildings and vehicl ...
. A leasing agreement which is not a finance lease is known as an
operating lease The expression " operating lease" is somewhat confusing as it has a different meaning based on the context that is under consideration. From a product characteristic stand point, this type of a lease, as distinguished from a finance lease, is one ...
.


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 Rent-to-own, also known as rental purchase or rent-to-buy, is a type of legally documented transaction under which tangible property In law, tangible property is literally anything that can be touched, and includes both real property and pers ...
, 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 A hire purchase (HP), also known as an installment plan or the never-never, is an arrangement whereby a customer agrees to a contract to acquire an asset by paying an initial installment (e.g., 40% of the total) and repays the balance of the price ...

Hire purchase
, used in the 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 is a contract-based system governed by law in the United States, 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. C ...
, used in the US and
Canada Canada is a country in the northern part of North America North America is a continent A continent is any of several large landmasses. Generally identified by convention (norm), convention rather than any strict criteria, ...

Canada
for the leasing of cars. Unlike in hire purchase, the asset is sold at its
residual value ''Residual value'' is one of the constituents of a leasing A lease is a contract A contract is a legally binding document between at least two parties that defines and governs the rights and duties of the parties to an agreement. A contract is ...
at the end of the term, rather than for a nominal amount.


References

{{Authority control Property Finance