Why You Should (and Shouldn't) Opt for a Month-to-Month Lease

Skipping the long-term lease agreement may give you the flexibility you need, but be aware of the control you give up.

U.S. News & World Report

What to Know About Month-to-Month Leases

woman sit on couch in a loft and work at laptop

A month-to-month lease provides some flexibility while your long-term housing plans fall into place.(Getty Images)

With more than 43 million renters in the U.S., according to the U.S. Census Bureau, the reasons and ways in which a person rents a home can be the same as millions of others or a unique situation. As a result, it’s tricky to account for all those scenarios with the same standard lease nationwide.

A lease contract typically lasts 12 months, although anywhere from three months to two years is also possible. Leases contracted for more than one year often include more concessions or a break in rent in exchange for the longer period of guaranteed tenancy, while shorter leases include slightly more costs due to the faster scheduled move-out.

But what about when your immediate future is uncertain and you’re not sure when you’ll need to move? In that case, your best option may be a month-to-month lease.

How Does a Month-to-Month Lease Work?

A month-to-month lease is a contract between the landlord and tenant that establishes tenancy with no scheduled end date. Instead, either the landlord or tenant may terminate the contract at will, as long as proper notice is given. Most state or local laws require either 30, 60 or 90 days’ notice, but the lease agreement will specify.

If you and your landlord can work amicably, a month-to-month lease may be a blessing to give you the necessary time to find the right housing. Of course, it can also backfire and cause headaches on both sides of the deal.

Reasons for a Month-to-Month Lease

Here are four reasons opting for a month-to-month lease may be in your best interest.

You might move soon. You’ll most likely see a month-to-month agreement when your yearlong lease comes to a close, as landlords commonly give tenants the option to renew their lease for a full year or switch to a month-to-month contract. If you’ve got any major life changes coming up in the next year – say you're transferring to a new city, getting married or planning to purchase a home – the month-to-month option gives you the flexibility you need for those situations. If you end up being able to stay, a month-to-month lease can also be converted to a long-term lease with relative ease.

Even if your landlord doesn’t offer a month-to-month option, there’s no harm in presenting your situation to the landlord – if you always pay rent on time and haven’t caused any damage to your apartment, there’s a chance the landlord will see the benefit of keeping a pleasant tenant without a specific end date. David Mele, president of real estate information site Homes.com, says renters shouldn’t be afraid to offer something outside the typical lease: “Sometimes renters don’t realize they can negotiate rent.”

You have roommates. Whether you found them on Craigslist or they’re your childhood best friends, roommates can be difficult to work with when it comes to planning out the next year. If one roommate is expecting to move out before a yearlong lease is up, rather than risking an illegal sublease or releasing the vacating roommate and amending your lease to bring on a newly vetted roommate, you can simply start a new month-to-month lease with the replacement – as long as the landlord agrees, of course.

There’s no penalty for breaking the lease. Uncertainty is a major stressor for renters, regardless of the type of lease contract they have in place. When you’re on a fixed-term lease and you need to move out prior to the end date, “There can be a cost to break that lease early,” Mele explains. There's a good chance you'll pay a couple of additional months of rent after moving out while your landlord preps and markets your apartment, and you might even end up having to pay rent for the duration of the lease if your landlord doesn’t find a new tenant.

If you might need to move within the next year, or you’re concerned about loss of income in the near future, a month-to-month lease allows you to end the rental agreement without additional fuss.

Your next home is under construction. Construction always adds a degree of chaos to planning your rental situation, and you need to be ready for a wrench to be thrown into the mix.

You may have commissioned your first home to be a new build, or you may be looking to relocate to a new apartment building downtown that’s not quite done, but either way you should anticipate delays by having leeway in your current lease, says Mary Gwyn, chief innovator of Apartment Dynamics, a property management firm that also trains other companies on property management practices. “That’s where the flexibility is really to your benefit,” she says.

Reasons Against a Month-to-Month Lease

Before you start negotiating your new month-to-month contract, consider these four downsides that may make the arrangement a less desirable option.

You’ll likely pay more. A month-to-month lease provides you with timeline flexibility, but it typically comes at a monthly financial cost. Because landlords have to offset the higher risk for a vacancy in the near future, they’ll charge higher rent. Often, the property’s lender will include additional fees for taking on a riskier month-to-month renter rather than signing on a long-term tenant, so the landlord will offset those fees by charging more in rent.

“At any of our communities, if someone opts to go month to month, they pay the freight for that,” Gwyn says. “Going month to month, fees can run $30 to $130 (per month)." In some major cities with competitive rental markets, the difference between a month-to-month lease and yearlong contract for the same apartment can be a few hundred dollars.

Your landlord can end the lease, too. Being able to move with a simple 30-day notice may be ideal for you, but keep in mind that your landlord has that same freedom. A month-to-month contract allows your landlord to give you notice that you need to find a new home for any reason.

If the landlord is advertising an apartment as a month-to-month lease, he or she may have construction plans in the near future. That’s the only scenario in which Gwyn has seen month-to-month leases marketed: “(The landlord) planned to either raze the property – as in raze it to the ground … or they were going to do a significant renovation and evict everybody, so it worked to the landlord’s advantage,” she says.

Landlords might say no. While plenty of landlords are opposed to month-to-month leases to avoid an unexpected increase in vacancy, some are simply unable to make such a deal. Depending on the loan the landlord currently has on the rental property, a lender has the ability to restrict month-to-month leases entirely. “We had one lender who even prohibited us from having us have any month-to-month lease, which is almost impossible,” Gwyn says.


You’ll lose out on concessions. New rental buildings are being constructed every month, particularly in major urban centers, and to remain competitive they’ll offer concessions like a free month of rent, waived amenities fees and even a free TV. But if you’re considering a month-to-month lease, read the fine print of any specials carefully – rent decreases or free months often require a long-term lease.

While some landlords may not require an increase in rent to go month to month or may still include move-in specials, you’re typically trading the financial deal for the flexibility to move out. Consider your priorities carefully to avoid paying more than is necessary on your rent in the long run.

Updated on July 24, 2020: This story was published at an earlier date and has been updated with new information.

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