If you’re looking for a more flexible option in renting, you might consider month-to-month leasing. This option in rental agreements tends to offer greater freedom when it comes to being able to move without penalty.
A month-to-month lease is a lease that you renew every 30 days. With a typical lease agreement, renters are locked into a 12-18 month rental agreement. These leases will also have information on what happens if they break the lease. Most long-term leases penalize with early termination fees because the expectation is that tenants will be paying for rent for the full term.
A month-to-month lease is different in that it’s usually close to being at will. This means that either party can give notice to end the agreement. The standard is 30 days’ notice, but in case tenants need to leave earlier, the penalty would be much less. Sometimes, those providing month-to-month lease agreements may also convert into a more standard lease.
Bear in mind, though, that most landlords would prefer longer term, stable residents. This means that short term leases may have higher rents. There’s actually reason for this: it costs both time and money to clean, stage, and advertise rental units when someone moves out. It’s a little more work to offer month-to-month leasing, which means, yes, tenants will have to pay for that flexibility.
Month-to-month lease agreements can also change faster than a typical rental agreement. A renter can give 30 days notice to move in the same manner as a landlord can also give 30 days notice to terminate the lease or raise the rent.
That isn’t to say that month-to-month leases aren’t beneficial. For people who aren’t yet invested in a community or are in a transitional phase, month-to-month leasing may be the best option.
Should you go month-to-month?
A month-to-month lease, also known as a rolling lease, offers advantages and disadvantages for both landlords and tenants. Here are some of the key points to consider:
- Flexibility for tenants: One of the most significant advantages of a month-to-month lease is the flexibility it provides for both tenants and landlords. Tenants can easily relocate or adjust their living situation without being bound by a long-term contract. This flexibility is particularly beneficial for individuals who have uncertain living arrangements, such as those who are between jobs or waiting for permanent housing.
- Minimal commitment: Month-to-month leases offer a short-term commitment compared to standard leases, which typically last for six months or a year. This minimal commitment is advantageous for tenants who are unsure about their long-term plans or those who need temporary housing for specific reasons, such as students on internships or seasonal workers.
- Short notice period: Unlike fixed-term leases, month-to-month leases usually require only a 30-day notice to terminate the agreement. This streamlined termination process gives tenants the freedom to move out quickly if they find a better living situation or if they need to relocate for personal or professional reasons.
- Easy termination: For both parties, terminating a month-to-month lease is generally simpler than breaking a long-term lease. It eliminates the need for negotiating early termination fees or dealing with legal repercussions.
- Rent adjustment flexibility: With a month-to-month lease, landlords have the flexibility to adjust the rental price more frequently to keep up with market conditions. This can be an advantage for landlords in areas where rent prices fluctuate frequently and can likewise work in favor of tenants when rental markets are volatile. If the rental prices drop, tenants can take advantage of the lower rates by giving their 30-day notice and moving to a more affordable property.
- Lack of stability for landlords: From a landlord’s perspective, month-to-month leases offer less stability and predictability. It can lead to more frequent turnover, making it challenging to find reliable long-term tenants.
- Rental rate uncertainty: Because rent adjustments can be made more frequently, tenants on month-to-month leases may experience uncertainty regarding the rental rate. Landlords may raise the rent more frequently to keep up with market rates or to offset maintenance and operating costs. This instability in rental costs can make budgeting and financial planning more challenging for tenants.
- Limited security for tenants: Month-to-month leases offer less security for tenants compared to fixed-term leases. Landlords can terminate the tenancy with a 30-day notice as well, which might be problematic for tenants who desire a stable living arrangement or those with families who prefer to establish roots in a particular neighborhood or school district.
- Less negotiating power: In a month-to-month arrangement, tenants may have less leverage to negotiate for lower rents or property improvements. Landlords have the flexibility to find new tenants quickly if the current ones don’t agree to the proposed terms.
- Limited legal protection: In some jurisdictions, tenants under month-to-month leases might have fewer legal protections compared to those with fixed-term leases. This can leave them more vulnerable to sudden eviction or other unfavorable changes in the rental agreement.
- Landlord preference: Some landlords may prefer long-term tenants as they provide more stability and reduce the effort and cost associated with frequent turnovers. As a result, they might be more hesitant to offer desirable rental properties on a month-to-month basis, limiting the options available for tenants seeking this arrangement.
A month-to-month lease can be a viable option for tenants who value flexibility and short-term commitments. It allows renters to maintain a degree of freedom in their living arrangements and make quick changes if necessary. However, the potential for frequent rent increases and limited stability may be a concern for some individuals. Landlords also face challenges with month-to-month leases, such as higher turnover rates and uncertainty about long-term occupancy.
Ultimately, the decision to enter into a month-to-month lease should be based on individual circumstances and preferences. Tenants and landlords must carefully weigh the pros and cons before choosing the leasing arrangement that best suits their needs.