Renting, also known as hiring or letting, is an agreement where a payment is made for the use of a good, service or property owned by another over a fixed period of time. To maintain such an agreement, a rental agreement (or lease) is signed to establish the roles and expectations of both the tenant and landlord. There are many different types of leases. The type and terms of a lease are decided by the landlord and agreed upon by the renting tenant.
History
Various types of rent are referenced in Roman law: rent (canon) under the long leasehold tenure of Emphyteusis; rent (reditus) of a farm; ground-rent (solarium); rent of state lands (vectigal); and the annual rent (prensio) payable for the jus superficiarum or right to the perpetual enjoyment of anything built on the surface of land.
Reasons for renting
There are many possible reasons for renting instead of buying, for example: In many jurisdictions (including India, Spain, Australia, United Kingdom and the United States) rent paid 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 purchase, i.e "renting by necessity". 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. 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 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 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. According to a poll by 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 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. 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.
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 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.