WHAT’S THE DIFFERENCE BETWEEN LEASING agreement AND RENTING agreement in Beijing?

The Different Types of Rental Lease Agreements in Beijing

More than a fourth of households in Beijing live in rental housing according to the GOV Center for Housing Studies. With about 5 million people across the city signing leases, you can be sure that there are plenty of different types of rental lease agreements out there to accommodate renters. While having different types of residential leases is beneficial, as a renter, you need to know which one works best for you. Before you navigate through the lease your landlord provides, you need to understand what leases are available and decide which one works best for you.

WHAT’S THE DIFFERENCE BETWEEN LEASING AND RENTING in Beijing?  

Many renters use the words renting and leasing interchangeably, but they do not mean the same thing. Both renting and leasing require the tenant to sign a legally binding residential lease agreement in which tenants and landlords agree on things like the length of tenancy, rules, and rent price. The difference between renting and leasing is the length of tenancy. It’s considered leasing when the tenant signs a lease for at least a year. A rental agreement is usually short term, such as renting month-to-month. In both cases, you’re still a renter. You have to follow the rules and pay a certain rent price. If you sign a lease agreement, you're accepting the entire duration of the lease, which is usually 12 months. If you sign a rental agreement, you agree to a month of tenancy.

GROSS LEASE VS. NET LEASE

In terms of payment, there are two types of leases: gross lease and net lease. A gross lease, or a full-service lease, is the most common type of lease. A gross lease has a predetermined rent that covers costs associated with owning the property, including things like tax(Fapiao), and maintenance. If you have a gross lease, you pay rent, and your landlord worries about maintaining the property.  

A net lease has a set rent price that only covers your tenancy, and additional property costs are not included in that rate but billed separately. The set rent price is lower than it would be in a gross lease, but tenants have monthly fees for things like tax and any maintenance work.

While the monthly rent price for a gross lease may be higher than it would be for a net lease, you can budget easier because the monthly bill is the same. A net lease has a lower cost, and you pay for things as you need it. For example, in a gross lease, you’re paying for maintenance whether you use it or not because the price of maintenance is factored into your rent. In a net lease, you wouldn’t have that factored into your rent. If you don’t need to make a maintenance request, you won’t be charged.  

If you’re unsure of which lease you have, ask your landlord before you sign it. Net and gross leases cover different things. Make sure you read your lease and clarify with your landlord what you are responsible for paying and how you will be billed — everything you will be billed for needs to be outlined in the lease.

FIXED-TERM LEASES

A fixed-term lease is the most traditional lease. They’re called fixed term because tenants and landlords are agreeing to abide by the lease for a fixed amount of time, normally 6 to 12 months. These leases should have the lease start and end date clearly labeled near the top of the lease. Once you and your landlord sign the lease, it can’t be changed during the dates specified, including things like rent amount and rules. You are also not usually allowed to break the lease early and your landlord cannot cancel the lease early (unless they have a just cause).   

Fixed-term leases are great for people who know they will stay in the same place for a while. These leases also offer security because the rent price won’t fluctuate month after month, and you don’t have to worry about your landlord not renewing your lease like you would in a month-to-month.

The main issue with fixed-term leases is that they are almost impossible to break without penalty. If you find out that you need to move before your lease end date, it could be quite costly. Sometimes, landlords will let you pay a two or one months’ rent to break the lease, and some may allow you to find a subtenant, but in most cases, breaking a fixed-term lease isn’t easy.  

MONTH-TO-MONTH LEASES (Serviced Apartments)

A month-to-month lease, also known as a periodic lease or a short-term apartment lease, is a rental lease agreement that typically lasts for 30 days. As long as proper notice is given, your landlord can change the terms of the rental agreement. This means that they don’t have to renew your lease. They can change your rental price or change certain rules as long as notice is given.

A month-to-month apartment lease agreement is a good option for people who need temporary housing because you can cancel your lease if you give your landlord notice. The downside to a short-term apartment lease agreement is that while it allows you the freedom to cancel your lease, it allows your landlord the same thing. If notice is given, your landlord does not have to renew your rental agreement. The other main issue with a month-to-month lease is that your landlord can change the price of rent at any time with proper notice.

Both lease types have pros and cons for renters to consider. Before you sign a lease, make sure you take note of the lease start and end dates. Know that leases are legal documents, so once you sign, you are agreeing to the terms.  

SUBLEASES

A sublease is when a tenant leases their rental property to a third party, with their landlord’s permission. Landlords handle subleases in different ways. Some landlords aren’t really involved in the process. They might leave it up to you to find a subtenant and make a contract. Then, they add the addendum to the lease and run a background check on the person subleasing. Other landlords may be more involved and have a specific process that they follow. In either case, the name of the original leaseholder remains on the lease. If your subtenant doesn’t make a payment or refuses to pay for damages, then you will be held responsible. When you get a subtenant, think of yourself as a cosigner. If they fail to pay, your landlord will look to you for the money owed.

A lease takeover, which is different than a regular sublease, is when you are no longer responsible for the property. The new tenant completely takes over your lease for the remainder of the time.

Whether your landlord allows subleases or lease takeovers is up to agreements rules. Make sure that your lease follows the laws on subleasing.  

Residential lease agreements can get confusing and involve hard-to-read legal jargon, but it’s important to know what lease you have and what it will mean for you before you sign it. If you have a question about anything, ask your landlord to clarify and double-check your state laws to make sure they’re following accordingly. Once you understand the basic lease types, you’ll be on your way to understanding how to read your lease and becoming an informed and educated renter.