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Month-to-month vs. Fixed Rate Leases


By Dez Duran-Lamanilao

Whether you are a tenant looking for a new place to live in or a landowner searching for your first tenant, it is always advantageous to have a clear grasp of the type of lease you want to pursue.

A fixed-term lease allows the renter to stay in the property within an agreed period, usually for one year. A month-to-month lease, on the other hand, automatically renews each month until either the landlord or the tenant gives a notice that they plan to end the rental agreement.

Landlords and tenants alike usually prefer to enter into fixed rate rental agreements because of its key benefits: financial consistency on the part of the landlords and residential security on the part of the latter. These benefits would mean:


  • Tenants may have less to worry about evictions and therefore only have to ensure that they pay their rent regularly.
  • Rates do not usually change in a fixed rate tenancy and property owners cannot just change the rental terms.
  • Offers steady and stable circle of neighbors
  • Most landlords charge lower rent for fixed rate because of the less probability of tenants ending the contract.
  • Landlords do not need to continually search for tenants or worry about tenants deciding to leave the premises unexpectedly.
  • Renters breaking their agreement may have to forego their deposit and prepaid rent for the month. As a result, landlords can hold them liable for all the inconvenience said decision might bring.
  • Properties may be more maintained in fixed-rate leases. Since more turnover possibility (which what happens in month-to-month) often results to more expenses for the owner.


There are landlords who may wish to have a more flexible control of their properties. Vacation properties are an example of properties that may require a month-to-month tenancy. This type of lease allows room for flexibility and offers the following advantages:

  • There is no penalty or loss of deposit on the part of the tenant.
  • Requires less deposit.
  • Landlords can increase the rent without having to wait for a specific length of time.
  • Tenants could be more responsive with their plans since they are aware that they will not be breaking their lease in the event that they decide to leave the property.

If you are still undecided on the type of lease you want for your property, seek the services of an expert so you are kept informed about your property. They can also advise you on the most beneficial option for your rental home, all factors considered.

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