Key takeaways
- Rent concessions are generally one-time incentives, like three months of free parking, six weeks of free rent, or a waived security deposit
- Concessions can be great for a renter’s budget by reducing short-term housing expenses, but can lead to surprisingly high costs when it comes time to renew
- Landlords are more likely to offer concessions when rents are flat or falling, or when demand is low, to attract tenants without lowering rents
Rents are starting to fall in some pockets around the country, which is good news for renters and a stark contrast from the pandemic-induced record highs. This is because more new apartments continue hitting the market, causing supply to outpace demand. Rents are falling the most in metros that are seeing the biggest gains in supply.
But for landlords, too much supply often results in higher vacancy rates. When this happens, they may offer rent concessions to attract tenants and fill units faster. That’s what’s happening now, and is why more than one-third of landlords offered at least one concession in July. These concessions are designed to make leases more appealing without permanently lowering monthly rents.
Renters may now find themselves in a negotiating position, with opportunities to score a better deal if they know what to look for. But knowing how to spot concessions – and when to take advantage – can be tricky. So what exactly is a rent concession, and how can it benefit you as a renter?
We asked Redfin’s Chief Economist, Daryl Fairweather, to help answer some common questions for renters. Let’s dive in, uncover answers, and learn tips along the way.
What is a rent concession?
A rent concession (also called a lease concession) is a temporary discount or incentive that landlords can offer to make a rental more attractive. “Concessions are a way of sweetening the deal for renters without reducing rent,” says Fairweather. “They might include a free month of rent, waived security deposits, or waived fees like application or parking fees.”
Landlords typically use concessions to fill vacancies more quickly or stay competitive in the market. While these one-time offers can help lower a renter’s upfront costs, they generally don’t affect the longer-term monthly rent, so it’s important to review the terms carefully before signing a lease.
Rent concessions vs discounts
Rent concessions and discounts both offer financial relief, but in different ways. Concessions are temporary perks, like a free month of rent or waived fees, without lowering the monthly rent. Discounts, however, reduce the monthly rent for the duration of the lease, providing ongoing savings.
Types of rent concessions
Rent concessions vary widely and can offer savings or added value to renters. You may be offered one or more concessions, depending on your landlord, lease, and any negotiations.
Common types of rent concessions include:
- Free rent: A certain number of months offered rent-free, typically at the start of the lease.
- Reduced rent: A temporary reduction in the monthly rent for a specific period.
- Waived fees: Landlords may waive application fees, administrative fees, or move-in fees.
- Discounted security deposit: A lower security deposit than what’s typically required.
- Free amenities: Access to services like parking, gym, or storage at no additional charge.
- Lease flexibility: Offering shorter or more flexible lease terms without the usual premium.
- Upgraded unit features: Free or discounted unit upgrades, like appliances or flooring.
How to ask for a rent concession
Asking for a rent concession involves research, negotiation, and documentation. Here’s a breakdown.
1. Research the market
If you’re a renter on the hunt for a new apartment, research is vital. Fairweather suggests, “shopping around for what other properties are offering before advocating for concessions from a potential landlord.” This helps you understand the market and gives you a better position when negotiating.
2. Make a clear request
Prepare a clear request explaining the current market conditions and be specific about the concession you’re seeking. Whether it’s a reduced rent or waived fees, having the data to back up your request is essential.
3. Negotiate lease renewals
If you’re looking to renew your lease with an additional concession, communication is key. Explain how the concession would help you stay longer, and bring market data if necessary. Be open to negotiation and flexible with alternatives if your initial request isn’t feasible.
4. Document the agreement
If you and the landlord reach an agreement, make sure the concession is reflected in the lease or added as an addendum. Review all terms carefully before signing, and plan for future expenses when the concession period ends.
Rent concession considerations for renters
Rent concessions can make a property more affordable initially, but renters could see a significant increase in overall housing costs once benefits expire. So, it’s important to plan ahead. Here are a few considerations to keep in mind.
Calculate the total value of a concession
To grasp the full benefit of the concession, translate it into a monthly expense and multiply it by the number of months you receive it. A waived security deposit of $1,000 is an immediate $1,000 saving, whereas $60 waived parking for three months is worth $180.
Anticipate increased expenses once concession ends
This is crucial. “You could see a large increase in your overall housing expenses once the concessions expire,” cautions Fairweather. For example, if parking costs $60 per month, and you have free parking for three months, that’s a total savings of $180. After the concession, you’ll need to start paying that $60 monthly fee, which increases your housing expenses.
Look at the fine print
Notice clauses that might make the concession less valuable in practice, and be a stickler for details. Free parking for 1 month versus 12 months is a big difference, after all.
Prepare your budget
Make sure you aren’t under budgeting or overspending. “You should be ready for increased costs after a concession ends,” continues Fairweather. “A waived security deposit won’t matter at lease renewal time, but waived amenity fees could become an expensive ongoing expense.” Adjust your budget accordingly to improve your finances throughout your lease, and know how much rent you can afford.
Why do property managers offer rent concessions?
Property managers might offer rent concessions for a variety of reasons. More often, they’re used to attract new tenants in a competitive market with high vacancy rates. Landlords might also provide concessions to retain existing tenants, reduce turnover costs, or respond to economic downturns.
Additionally, “Some places restrict rent increases (rent control),” Fairweather points out. “But landlords can still factor in an effective rent increase by offering a concession for just one year, like free parking or a few months of free rent, while still raising the base rent.”
In this case, while the tenant’s overall payments during the lease remain the same, the official rent listed in the lease will be higher. If the tenant then decides to renew their lease, their monthly payments might rise substantially, unless they negotiate for additional concessions.
Why are concessions so common right now?
New apartments are filling more slowly (absorption rate) than in the past two years due to an imbalance of supply and demand. Many landlords are responding by offering concessions to stir up interest. This trend is largely due to the surge in construction that occurred during the pandemic, which has led to an oversupply of inventory today.
So, as new apartments keep entering the market and supply outweighs demand, rents have flattened or even begun falling in some places. “When rents fall or hold steady, concessions become more common,” adds Fairweather.
In Sun Belt cities like Tampa and Austin, supply far outweighs demand, so a greater percentage of landlords are offering concessions. Nationwide, one-third of property managers offered concessions in mid-2024.
Concessions can also improve the long-term rental market by helping property managers entice new tenants in times of low demand. “They’re a way of breathing life back into their own market, in a sense,” she notes.
How to find concessions on an online rental listing
Finding incentives and concessions on an online marketplace is easy. Most will indicate that a listing is a good value or offers incentives.
On Redfin, for example, any listing that offers incentives will have the “Deal” watermark on the photo.
When you click on the listing, you can find a more thorough description of what they’re offering.
You can also filter to only show listings with deals or promotions
When in doubt, call the property manager or landlord to clarify what incentives they’re offering. Their phone number should be on the listing.
This post first appeared on Redfin.com. To see the original, click here.