Important points
- Rent discounts are typically one-time incentives, such as three months of free parking, six weeks of free rent, or a waived security deposit.
- Discounts can have a big impact on renters’ finances by reducing short-term housing costs, but they can be surprisingly expensive when it comes time to renew.
- Landlords are more likely to make concessions to attract tenants without lowering rents when rents are flat or falling, or when demand is low.
Rents are starting to fall in some parts of the country, which is good news for renters and contrasts with the record highs caused by the pandemic. this is, newer apartment They remain on the market and supply exceeds demand. Rents are falling the most in the metropolitan areas where supply is increasing the most.
However, when there is too much supply for landowners, often High vacancy rate. If that happens, you may offer rent concessions to attract tenants and fill units faster. That’s what’s happening now and that’s why more than one-third of landlords offered at least one concession in July. These benefits are intended to make your lease agreement more attractive without permanently lowering your monthly rent.
Landlords may now find themselves in a negotiating position. know what to look for. But knowing how to identify concessions and when to take advantage of them can be difficult. So what exactly is a rent discount and how can it benefit you as a renter?
we asked Darryl Fairweather, Chief Economist at Redfinanswers frequently asked questions for renters. Dig deep to find the answers and learn tips along the way.
What is rent discount?
Rent concessions (also known as lease concessions) are temporary discounts or incentives that landlords can offer to make rentals more attractive. “Concessions are a way to make the deal better for the landlord without reducing the rent,” Fairweather says. “This may include one month of free rent, waiving security deposits, and waiving fees such as application fees and parking fees.”
Landlords typically use concessions to fill vacancies faster or to stay competitive in the market. These one-time offers can help lower initial costs for renters, but they usually don’t affect long-term monthly rent, so it’s important to check the terms carefully before signing a lease. is.
rent discounts and discounts
Rent discounts and concessions both provide financial relief, but in different ways. A concession is a temporary benefit that allows you to get one month’s rent free or have fees waived without reducing your monthly rent. However, the discount reduces your monthly rent for the duration of the lease, resulting in ongoing savings.
Types of rent discounts
Rent discounts vary and can offer savings and added value to renters. Depending on your landlord, rental agreement, and negotiations, you may be offered one or more concessions.
Common rent discounts include:
- free rent: A certain number of months of rent are usually provided free of charge at the beginning of the lease.
- Rent reduction: A temporary reduction in monthly rent for a certain period of time.
- Fee Waiver: Landlords can waive application, administration, or occupancy fees.
- Deposit discount: A lower deposit than is normally required.
- Free amenities: Services such as parking, gym, and storage are available at no additional charge.
- Lease flexibility: Offers shorter or more flexible lease terms without the usual premium.
- Upgraded unit features: We offer free or discounted unit upgrades such as appliances and flooring.
How to request rent reduction/exemption
Asking for rent concessions requires research. negotiationand documentation. Here’s the breakdown.
1. Market research
If you’re a renter looking for a new apartment, research is essential. Fairweather suggests “shopping around to see what other properties are offering before claiming concessions from a potential landlord.” This will help you understand the market and give you an advantage during negotiations.
2. Make clear demands
Prepare a clear request that explains the current market situation and be specific about the concessions you are seeking. Whether it’s a rent reduction or a fee waiver, it’s essential to have data to support your request.
3. Lease renewal negotiation
If you want to renew your lease with additional benefits, communication is key. Explain how the concessions will help you stay longer and bring market data if needed. If your initial request is not possible, be flexible and have negotiable alternatives.
4. Document the agreement
Once you and your landlord reach an agreement, make sure the concession is reflected in the lease agreement or added as an addendum. Review all terms carefully before signing and plan for future expenses when the concession period ends.
Rent discount considerations for renters
Rent discounts initially make properties more affordable, but once the benefit expires, renters can see a significant increase in their overall housing costs. Therefore, it is important to plan ahead. There are some considerations to keep in mind here.
Calculate the total amount of concessions
To get the full benefit of your benefit, convert it into a monthly cost and multiply it by the number of months you received it. Waving the $1,000 deposit is an immediate $1,000 savings, but waiving $60 parking for three months is worth $180.
Expenses are expected to increase after the concession ends.
This is very important. “When incentives end, overall housing costs can increase significantly,” Fairweather warns. For example, if your parking fee is $60 per month and you get 3 months of free parking, you’ll save a total of $180. After the concession, you will have to start paying $60 per month and your housing costs will increase.
look at the fine print
Be aware of clauses that may actually dilute the value of your concessions, and be particular about the details. After all, there’s a big difference between getting free parking for one month and getting it free for 12 months.
prepare a budget
Make sure you are not under budget or overspending. “You need to be prepared for increased costs after the concession ends,” Fairweather continues. “While waiving security deposits is not an issue at lease renewal, waiving amenity fees can be a significant ongoing expense.” adjust the budget Improve your finances during the lease period accordingly, how much rent can i pay.
Why do property management companies offer rent discounts?
Property managers may offer rent discounts for a variety of reasons. often they are used to it Attract new tenants In a competitive market with high vacancy rates. Landlords may also make concessions to retain existing tenants, reduce sales costs, or respond to economic downturns.
Furthermore, “in some places, rent increases are restricted (rent management),” Fairweather points out. “But landlords still Substantial rent increase By increasing the base rent while offering concessions for just one year, such as free parking or several months of free rent. ”
In this case, the tenant’s total payments during the lease term will remain the same, but the official rent stated in the lease agreement will be higher. If a tenant is decided after that Renew your rental agreementyour monthly payments could increase significantly unless you negotiate additional concessions.
Why are concessions so common now?
The new apartment is fill more slowly (Absorption rate) has increased from the previous two years due to the imbalance between supply and demand. Many landlords have responded by offering concessions to increase interest. This trend is mainly due to construction rush It occurred during a pandemic; Oversupply of inventory today.
So, as new apartments continue to enter the market and supply outstrips demand, rents remain flat or even fall. started to fall In some places. “Concessions become more common as rents go down or stay the same,” Fairweather added.
In Sunbelt cities like Tampa and Austin, supply far exceeds demandtherefore more landlords are offering concessions. Nationally, a third of property managers have offered concessions in mid-2024.
Concessions can help property managers attract new tenants when demand is low and can also improve the long-term rental market. “In a way, they’re a way to breathe life into your market,” she says.
How to find offers on online rental listings
It’s easy to find incentives and offers in online marketplaces. Most indicate that the listing is good value or offers incentives.
above red finFor example, listings offering incentives will have a “deal” watermark on the photo.
Click on the listing to see a detailed description of what’s on offer.
You can also filter to only see listings with sales and promotions.
If in doubt, call your property manager or landlord to clarify what incentives they are offering. Their phone number should be listed.
