After your apartment application gets approved, your landlord may offer you a choice of lease terms, such as one year or two years. In your excitement to sign the lease and settle into your new place, you may be tempted to opt for the longer term. A longer lease term might very well be the best choice for you. But before you commit to one lease term or another, take a moment to consider the pros and cons of each.
Why Choose a One-Year Lease Term?
A one-year lease term is the most popular lease term option for apartments, and for good reason. A year is long enough to learn whether you like an apartment enough to stay even longer, and it's short enough to give you the flexibility to move after a reasonable amount of time (12 months) without having to break a lease and possibly pay a penalty. If you decide you like your apartment and you've been a good tenant, you should be able to continue living there by renewing your lease.
Why Choose a Two-Year Lease Term?
If you're confident that you'll stay in your new apartment for a while, consider signing a lease for a two-year term, if it's available. Although you'll lose the flexibility of being able to leave without breaking your lease after 12 months if things don't work out, committing to a two-year term has its benefits.
Perhaps the greatest benefit is rent control. Even if your landlord wants to raise your rent at your next renewal, he'll have to wait 24 months before doing so, instead of just 12. The savings may be significant if you're in an economy where rents are expected to climb.
Another benefit of a longer lease is peace of mind. You'll know that you're set in your new home for at least two years. Since your landlord won't have an opportunity to choose not to renew your lease in 12 months, you can stay for 24 months (short of getting evicted for nonpayment of rent or other serious lease violations).
In some cases, you may also be able save money by signing a two-year lease. Finding renters and refreshing an apartment after a renter leaves is costly and time-consuming for landlords. If you're willing to sign a two-year lease, you may be able to negotiate with the landlord for a lower monthly rent. After all, you're guaranteeing that rental income for two years, so the landlord doesn't have the risk of a vacancy during that period.
Check the Break Policy
When signing a two-year lease, it's even more critical to understand the consequences of breaking the lease. Make sure the written lease agreement includes these details. Do not rely on a verbal agreement of any kind. Reasonable lease-break terms may include an obligation for the renter to forfeit their security deposit or pay an extra month (or even two) of rent. Beware of policies that make you responsible for the rent for any time that the apartment is vacant. If the landlord gets the rent whether or not he finds another renter, what's his incentive search for a new renter?