When deciding on renting a house, you have two options regarding leases in Philadelphia. Depending upon your needs, you can select a short-term or long-term lease. Sometimes, individuals work jobs that require them to move from place to place, such as a traveling nurse. While other individuals have families, including children in school, they may want to settle into the rental and prefer a long-term lease.
In a large city such as Philadelphia, there are plenty of options when it comes to apartments and rentals. Additionally, understand the difference between short-term vs long-term leases and determine what’s best for you before your home search.
What are short-term leases in Philadelphia?
Short-term leases in Philadelphia refer to a legal lease between a tenant and a landlord. Furthermore, the time frame on a short-term lease is under 12 months, typically 3-6 months, or at times, month-to-month. Additionally, a short-term lease or rental is usually fully furnished, and the landlord covers the utility bills.
A short-term lease is ideal for people who don’t want to be tied down to a certain area or apartment. These reasons for the short term can range from employment to getting a feel for a new area. Therefore, if you’re new to an area and considering purchasing property in that neighborhood. Consider a short-term lease to see if the area is right for you.
Is short-term leases in Philadelphia legal?
As a landlord, short-term leases in Philadelphia are only legal with proper zoning and permits. These permits can include a rental license, a limited lodging permit, and a commercial activity license. Additionally, these permits needed for short-term rentals, usually less than 30 days.
Philadelphia requires smoke alarms along with carbon monoxide detectors. The landlord pays an additional 8.5% tax on the rental due to the “City of Philadelphia Hotel Tax”. Lastly, to obtain these licenses and permits through the city’s website or by visiting city hall.
Advantages of short-term leases in Philadelphia
Benefits for the Landlord
- The rates for a short-term lease tend to be higher than a yearly lease. Essentially, allows the landlord more profit if they can continuously keep renting out the place.
- Ability to increase rental rates between tenants. If you sign a long-term lease, usually a yearly lease, the terms are set. There’s no adjusting the rent in the middle of a tenant’s lease.
- The landlord can examine the property more often, staying on top of maintenance tasks. Additionally, it limits the risk of serious issues or repairs.
Benefits of short-term leases for Tenants
- Ability to try a new area without any long-term commitments. Excellent for someone getting a feel for a neighborhood without the hassle of purchasing a house.
- Ideal for individuals who frequently get relocated for work.
- Landlords usually cover the utility bills. It’s a hassle switching utility bills from one name to another. So with short-term rentals, the landlord factors the average monthly bill into the property’s rental price.
- Most of the time, short-term rentals have furniture. Saves the tenant money on purchasing furniture. Furthermore, the time/effort on moving these items from place to place.
Disadvantages of short-term leases in Philadelphia
- A downside of short-term leases for renters the fact that the monthly rental rate’s higher than a yearly lease.
- Less availability. A short-term lease may be more difficult to find since there are limited options. Most landlords prefer long-term leases because they minimize vacancy and the hassle of locating multiple tenants within a year.
- Landlords are responsible for paying higher taxes. The city of Philadelphia charges an additional 8.5% in taxes.
- The headache of constantly moving. When you’re moving into a new place, it requires a plan and takes time to prepare the property and move items. It’s easier to have a long-term lease and settle into a property for more than a few months.
- Short notice to locate new tenants, and run the risk of lower-quality tenants due to a limited screening process.
Long-term leases in Philly
A long-term lease in Philly refers to your standard 12 to 18-month lease, at times longer. The terms remain the same for the duration of the lease. Most landlords request first and last month’s rent, along with a security deposit. A long-term lease still requires a rental license, but the property taxes are lower than a short-term rental property in Philadelphia. If you’re looking for the peace of mind of residing in the same location, a long-term lease is perfect for you.
Pros and cons of long-term leases
Advantages of long-term
- Stability for both the tenant and landlord. When signing a lease, both sides agree to the terms stated within the lease. A long-term lease guarantees that the property owner has a tenant. Additionally, it allows the tenant to get comfortable within the place and area without constantly moving.
- Steady monthly income for the landlord. Long-term rentals guarantee a tenant for at least 12 months, which minimizes vacancy rates.
- Lower taxes owed by the owner, along with lower monthly rent by the occupant.
- Fewer permits required to operate a long-term rental home.
- Easier to manage. Less paperwork and fewer property showings. Most of the time, the long-term tenant would handle minor issues, which can save the owner time and money.
- The tenant handles the utilities, leaving them responsible for the lack of payment. Essentially, it protects the homeowner from being stuck with the bills. However, a security deposit addresses any damages or remaining bills.
Disadvantages of long-term leases
- Tenants are locked in for at least a year. A long-term lease lowers the renter’s flexibility with relocating if they don’t like the place.
- Risks of dealing with a difficult tenant long-term.
- As a landlord owning a long-term rental, the rental rate remains the same for the term of the lease. No chance of rising rent until it’s time for a new renter or renewal of the lease.
- Potential for increased property maintenance. Most of the time, with a long-term lease, the tenant may not identify problems. Essentially leading to major issues or property expenses.
Short vs long-term leases in Philadelphia
It’s important to understand the difference between a short-term and long-term lease. Both lease routes provide pros and cons for renters and homeowners. Furthermore, you will want to identify your needs when it comes to renting a house. If you’re looking for stability of residing at the same location, consider long-term.
Additionally, if you’re new to an area, considering purchasing a property, it’s recommended to apply for a short-term lease. The short-term lease allows the individual to experience the neighborhood without a long-term agreement.
If necessary, a real estate agent can help tenants locate short-term rentals or assist landlords with qualifying potential tenants. An agent can also draft a lease or review a lease for the renter. Lastly, weigh out each route to determine what will best fit your real estate needs.