A month-to-month lease is a short-term lease agreement between and landlord and tenant. Typically, the lease renews every 30 days unless either party provides notice stating otherwise. Month-to-month leases can be attractive due to their flexibility but they also come with potential downsides: namely, the landlord can change the lease terms at any time, as long as they provide sufficient notice.
Below, we’ll highlight the differences between a year-long lease and a month-to-month agreement, discuss the pros and cons of a monthly arrangement, and help you decide whether this type of lease is right for you.
Month-to-month vs a year-long lease
A year-long lease is the most common type of lease agreement. With a year-long lease, you and your landlord must uphold the terms of the agreement for the entirety of the lease. There are some caveats to this, but generally speaking, the landlord cannot raise the rent, reduce the amenities listed on the lease, or terminate the lease agreement until the specified end date.
With a month-to-month lease, the terms can be adjusted every 30 days. This offers the landlord the chance to raise the rent, eliminate utilities or amenities from the lease, and more. The landlord must still provide notice to the tenant before any of these changes take effect, but there is nothing stopping them from implementing changes. As such, landlords yield a lot of power due to the flexibility of these arrangements. But so do tenants.
Often, after a tenant’s fixed-term lease expires, the agreement becomes a month-to-month lease unless you opt to sign another year-long lease. If you like your apartment and trust your landlord but aren’t ready to commit to another year-long lease, a month-to-month agreement could be a great option.
Pros of month-to-month leases
The main benefit of month-to-month leases is that they are very flexible. They automatically renew at the end of each month, but there are no penalties for moving out.
You can move out at any time
If you decide to move out in short order, there will be no fees for leaving your rental early. As long as you provide sufficient notice and leave the rental in good condition, your landlord must return your security deposit and you can be on your way.
If you’re in a transitional phase of life such as trying to buy a house, applying for a promotion in another city, or considering moving in with a significant other, a month-to-month lease could be a strategic option. It would enable you to take advantage of those opportunities without worrying about finding a subletter or paying a penalty for breaking your lease.
You can (probably) switch to a fixed-term lease later on
In the event that you rent a month-to-month apartment and then decide you’d like to stay long-term, there’s a good chance your landlord will be willing to offer you a year-long lease. After all, if you’re a respectful tenant, your landlord has plenty of incentive to keep you around.
Proposing this to your landlord could give you some bargaining power to negotiate a more competitive rate for rent – but don’t get carried away. If you do this, make sure you’re aware of the current market value for comparable rentals and propose a rate in-line with those prices. Ultimately, switching to a year-long lease agreement will likely save you money.
Cons of month-to-month leases
There are a number of potential downsides to month-to-month leases, and it’s up to you to determine whether you can tolerate them. As much as the flexibility is appealing, remember that it applies to the landlord too, meaning you have no recourse if your landlord abruptly changes the terms of your rental agreement.
If you already have a relationship with your landlord, it will be much easier to decide whether you can navigate a month-to-month lease with them. If you’re working with a new landlord, think carefully about these potential challenges and determine how much risk you’re willing to take on.
No security
One of the main issues with month-to-month leases is that they don’t offer any security. The landlord could terminate the lease at any time and you would have no recourse. If they decide they’d prefer to boot you out and rent the unit as an Airbnb or have a family member move in, there’s nothing stopping them.
All the landlord needs to do is provide sufficient notice and you could find yourself without a place to live. Depending on how competitive the rental market is where you live, this could be a serious concern.
Higher cost
Month-to-month leases sometimes come with higher rent prices. This helps the landlord compensate for the fact that there’s no guarantee that a tenant will stay long-term. Ultimately, lower tenant turnover is more cost-effective for a landlord so long-term lease agreements typically offer more competitive rates.
Before opting out of a year-long lease, do the math to ensure it really makes sense to pay more. If there’s a chance you’ll be in your rental for a year, it may be worth sacrificing some flexibility for the stability and a lower rate. That said, month-to-month rental agreements don’t always mean higher prices, especially if they come into effect following a year-long lease.
Potential for rent increases
When there is no long-term lease agreement in place, a landlord can raise the rent as often as they like as long as they provide sufficient notice. Usually landlords must provide 30, 60, or 90 days’ notice before they can increase the rent; the laws vary from state to state so make sure you check what they are where you live.
Additionally, there are no limits on how much the landlord could potentially raise the rent. While they are likely constrained by the market-value of the unit, there’s still a chance that your landlord could raise the rent significantly over the course of a year, especially if you live in a desirable area.
Landlord can change the terms at any time
A month-to-month lease is subject to all kinds of changes. As long as the landlord provides the minimum notice, they can add or remove provisions to your month-to-month lease at will. This could mean that utilities that were once covered under your rent could be removed, increasing your monthly cost of living significantly. The landlord could also remove provisions like parking, permissions to have pets, gardening services, and more.
If you have a good relationship with your landlord the chance of them changing the terms abruptly is probably unlikely, but you should keep it in mind.
Is a month-to-month lease right for you?
Even though month-to-month leases have a number of objective disadvantages, they are practical in certain circumstances.
If you know that you’d like to live in an apartment long-term, a yearly lease is preferable because the rent and the terms of the lease will stay the same for the duration of the agreement. You’ll likely save money and you’ll have peace of mind knowing your housings costs will remain stable all year.
For those that need a little flexibility, a month-to-month lease can be a good idea. For instance, if you’re in the process of buying a home, a month-to-month lease would give you the flexibility to move out early without risking a fee for terminating your lease agreement early. Or, if you’re new in town and not sure which neighborhood is the right fit for your lifestyle, a month-to-month rental gives you the option to move if you’re unhappy.
Ultimately, if you’re looking for the freedom to pivot, month-to-month leases are a great way to secure an apartment. As long as you’re informed about the disadvantages of this leasing arrangement you can be prepared to confront any challenges that arise.
