UK Accounting Glossary
An agreement by which an owner of real property gives the right of possession to another for a specified period of time and payment.
A contract by which one party conveys land, property, services, etc. to another for a specified time, usually in return for a periodic payment.
A lease is a legal contract that transfers the right of possession to real property, typically in exchange for payment of rent. The party to a lease that takes possession is called the lessee. The party to a lease that grants possession is called the lessee. The lessee and lessor of a lease are often called the tenant and landlord, respectively. Every lease should be in writing. Minimally, the lease must identify the lessor, lessee, the property, the rent, and the interval of possession. In practice, the commercial lease for an important property can stretch to hundreds of pages; the typical residential lease is merely a few pages. Not surprisingly, leasing 250,000 square feet of class A office space for 20 years in a midtown Manhattan high-rise is unlike renting a cottage in Vermont for the summer, yet each agreement is a lease. Using a professional real estate agent to negotiate a commercial lease is thus often extremely advisable; for a residential lease, an agent may sometimes be helpful, but the stakes are much less.
The lease on all of these properties is up in May, and the owner will not be renewing them, as he plans on tearing the buildings down to put up a parking garage.
For people who don’t have the money for a down payment, a “lease-to-own” arrangement is a good way to buy property, because their monthly payments go towards the purchase price, but they are not liable for the full amount if they need to get out of the contract.
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This glossary post was last updated: 10th February 2020.