Key takeaways
- Rent concessions are typically one-time incentives like free parking for three months, six weeks of free rent, or waived security deposits
- While concessions can help renters in the short term by reducing housing expenses, they may lead to higher costs upon lease renewal
- Landlords offer concessions more often when rents are stable or declining to attract tenants without lowering rental rates
Rents are beginning to decrease in certain areas of the country, a welcome change for renters compared to the record highs seen during the pandemic. This shift is due to a surplus of new apartments entering the market, causing supply to exceed demand. The steepest rent declines are occurring in cities experiencing the largest increases in available units.
In situations where there is an excess of available units, landlords may offer concessions to entice tenants and fill vacancies quickly. This explains why more than one-third of landlords provided at least one concession in July. These concessions are intended to make leases more attractive without permanently lowering monthly rents.
Renters now have the opportunity to negotiate for better deals if they understand how to identify and take advantage of concessions. So, what exactly constitutes a rent concession, and how can it benefit renters? To answer these questions and provide insights, we turned to Redfin’s Chief Economist, Daryl Fairweather.
What is a rent concession?
A rent concession, also known as a lease concession, is a temporary discount or incentive that landlords offer to make a rental property more appealing. According to Fairweather, concessions are a way to enhance the rental deal for tenants without reducing the rent amount. These incentives may include a free month of rent, waived security deposits, or waived fees such as application or parking fees.
Landlords use concessions to expedite the filling of vacancies or remain competitive in the market. While these one-time perks can lower upfront costs for renters, they typically do not impact the ongoing monthly rent. Therefore, it is crucial for renters to carefully review the terms before signing a lease.
Rent concessions vs discounts
Rent concessions and discounts both provide financial relief, but in different ways. Concessions offer temporary benefits like a free month of rent or waived fees without reducing the monthly rent amount. On the other hand, discounts lower the monthly rent for the entire lease duration, resulting in continuous savings.
Types of rent concessions
Rent concessions come in various forms and can provide savings or additional value for renters. Depending on the landlord, lease terms, and negotiation, renters may be offered one or more concessions.
Common types of rent concessions include:
- Free rent: A specified number of rent-free months typically at the beginning of the lease.
- Reduced rent: A temporary reduction in the monthly rent for a specific period.
- Waived fees: Landlords may waive application, administrative, or move-in fees.
- Discounted security deposit: A lower security deposit than the standard requirement.
- Free amenities: Access to services like parking, gym, or storage at no extra cost.
- Lease flexibility: Offering shorter or more flexible lease terms without additional charges.
- Upgraded unit features: Free or discounted upgrades to the unit such as appliances or flooring.
How to request a rent concession
Seeking a rent concession involves research, negotiation, and documentation. Here’s a breakdown of the process:
1. Research the market
Before requesting a concession, it’s essential for renters to research the market. Fairweather recommends comparing offers from other properties to strengthen negotiations with potential landlords.
2. Clearly state your request
Prepare a clear request outlining current market conditions and specify the concession you are seeking. Whether it’s a reduced rent or waived fees, having data to support your request is crucial.
3. Negotiate lease renewals
If aiming to renew a lease with an additional concession, effective communication is key. Explain how the concession benefits you in the long run and present market data if required. Stay open to negotiation and consider alternative options if your initial request is not feasible.
4. Document the agreement
Upon reaching an agreement with the landlord, ensure that the concession is reflected in the lease or added as an addendum. Carefully review all terms before signing the lease and plan for future expenses once the concession period concludes.
Considerations for renters regarding rent concessions
While rent concessions can initially make a property more affordable, renters should anticipate a significant increase in overall housing costs once the benefits expire. Therefore, planning ahead is crucial. Here are some factors to keep in mind:
Calculate the total value of the concession
To understand the full benefit of a concession, convert it into a monthly expense and multiply it by the number of months it is provided. For instance, a waived security deposit of $1,000 results in an immediate saving of $1,000, whereas $60 waived parking for three months equals a $180 saving.
Prepare for increased expenses post-concession expiry
It’s essential to anticipate a potential spike in overall housing expenses once the concessions end. Fairweather warns that renters may face a significant increase in costs post-concession, such as transitioning from free parking to a monthly parking fee.
Review the fine print
Take note of clauses that could diminish the value of the concession in practice and pay attention to details. The difference between free parking for one month versus twelve months is substantial.
Plan your budget accordingly
Ensure that your budget accommodates potential increased costs after the concession period concludes. Fairweather advises adjusting your budget to manage expenses effectively throughout the lease, considering factors like waived amenity fees that could become ongoing expenses.
Why do property managers provide rent concessions?
Property managers offer rent concessions for various reasons, primarily to attract new tenants in a competitive market with high vacancy rates. Concessions may also be used to retain existing tenants, reduce turnover costs, or respond to economic downturns.
Additionally, Fairweather notes that some areas enforce rent control regulations but landlords can still implement an effective rent increase by offering a concession for a limited period, such as free parking or a few months of rent-free living, while raising the base rent.
In such cases, although the tenant’s overall payments during the lease remain constant, the official rent stated in the lease increases. Upon lease renewal, the tenant may face a considerable rise in monthly payments unless they negotiate for additional concessions.
Why are rent concessions prevalent currently?
The absorption rate for new apartments is slower than in the past two years due to an imbalance between supply and demand. To generate interest, many landlords are offering concessions in response to the surge in construction during the pandemic, resulting in an oversupply of inventory today.
As more new apartments enter the market, leading to a surplus of available units, rents have either stabilized or started to decline in certain areas. Fairweather explains that in times of flat or decreasing rents, concessions become more prevalent.
Cities in the Sun Belt like Tampa and Austin have an excess of supply compared to demand, prompting a higher percentage of landlords to offer concessions. Nationally, one-third of property managers provided concessions in mid-2024.
Concessions can also benefit the long-term rental market by helping property managers attract new tenants during periods of low demand, revitalizing the market in the process.
How to identify concessions in an online rental listing
Discovering incentives and concessions on an online platform is straightforward. Most listings will indicate if they offer good value or incentives.
On Redfin, listings with incentives will display a “Deal” watermark on the photo.
Once you click on the listing, you can find a detailed description of the incentives provided.
You can also filter listings to only show those with deals or promotions.
If unsure, contacting the property manager or landlord to clarify the incentives offered is advisable. Their contact information should be available on the listing.