What Is a Rent Concession? A Landlord's Guide

Attracting tenants and maintaining occupancy is essential to owning a successful rental property. But what do you do when you’re struggling to find a new tenant or want to increase your resident retention rate? This is where rent concessions come into play. Here’s everything you need to know before offering a rent concession. 

What Is a Rent Concession? 

A rent concession is an adjustment or compromise a property manager or landlord makes to lease terms to attract tenants. The rent concession is typically a temporary incentive that benefits tenants so they are persuaded to sign or renew a lease. One of the main reasons landlords use rent concessions is to fill vacancies. For example, waiving the first month’s rent is a common rent concession that can quickly attract tenants. The longer a unit sits vacant, the less profit you will make as a landlord. The idea is that the money required for a rent concession is far less than the overall expense of having a vacancy. 

Types of Rent Concessions 

A concession can take the form of a rebate, discount, monetary compensation, or a physical good or service. A landlord will advertise the rent concession (or, in some cases, negotiate the terms of a lease) to attract potential tenants or retain current tenants. Rent concessions can be used on a one-time, monthly, or yearly basis. 

Although rent concessions are given at the landlord’s discretion, it is common for tenants to ask for a concession, which results in a negotiation based on the tenant’s needs and the landlord’s preference. Although rent concessions typically involve a material item or reduced cost on the tenant’s end, landlords get creative to avoid vacancies as much as possible. For example, some landlords will give potential renters surveys to see what concessions might work best.

Here are some common examples of rent concessions: 

• Free or prorated rent for the first month  
• Reduced rent for a one-year lease 
• Waived fees, such as move-in fees, pet fees, etc.  
• Reduced or waived security deposit 
• Updated décor, new appliances, and various renovations 
• Allowing a wall or walls to be painted   
• Pay for moving costs (a landlord will pay for one cost of moving, such as a moving van or storage locker) 
• Pay for broker’s fee  
• Free use of on-site amenities that are typically paid for, like parking, laundry, or a storage unit 
• Free internet or other utilities 

These are just a few of the common rent concessions landlords use. There are three types of rent concessions you should be aware of as a landlord, especially if you’re leasing or buying a property for the first time.  

Lease-up concessions 

Lease-up concessions are typically used for newly constructed properties, especially large residential rental buildings. These concessions allow landlords to lease their rental property quickly so it can reach capacity or reach a stabilized occupancy goal where the rental property becomes profitable.  

Marketing concession 

This type of concession is usually used for older investment properties, such as a renovated building. The strategy is to market the property slightly above the average market rent rates, so the concession appears to bring the rate in line with the rest of the market. This method is acceptable as long as the property is substantially occupied and priced appropriately according to the market.  

When to Use Rent Concessions 

Deciding when to use rent concessions can be tricky, but they are typically used to attract potential tenants to fill vacancies quickly. This tactic is often used when a landlord is opening a new, large rental property, experiencing a slow market, or simply having trouble finding tenants. 

Along with attracting prospective tenants, you might also use a rent concession to encourage current tenants to renew their lease. You could also use rent concessions to provide your tenant with a discount on rent if you decide to renovate a tenanted unit. 

Resident retention is one of the best ways to keep your rental property profitable. If you have a tenant of three years who pays on time every month or months in advance, it might be a good idea to provide them with a small concession. If you discover you have frequent vacancies, consider using a rent concession or another form of tenant retention.   

How to Add a Rent Concession to Your Listing on Apartments.com

If you choose to offer rent concessions and list your rental property on Apartments.com, you can easily add the concession to your listing. Here's how:

1. Login: Access your Apartments.com account from the homepage.

2. Navigate to properties: Click on “Properties and Listings” in the upper left corner, then select “Properties.”

3. Select a property: Choose the property you want to update and click “Edit Listing.”

4. Access property details: Under your property’s address, click on “Property” to edit your rental property’s general information, description, and rent concessions/specials.

5. Add rent concession: Scroll to “Rent Specials.” Here, you can input your concession details:

   • Title: Give your concession a title, such as “Prorated Rent for the First Month.”

   • Start date: Select when the concession begins.

   • End date: Choose when the concession ends. When the end date of your rent concession occurs, it will no longer be shown on your listing, but you can extend the end date of your rent concession at any time by following this process again.

   • Description: Write a detailed description of the concession, such as “Prorated rent for the first month of your lease. Contact the leasing office for more information.”

6. Display options: If you pay for an advertising package that is Gold or above on Apartments.com, then you have the option to add your rent concession to the search results page. To do this, decide if you would like the rent concession to show up as “Discounts” or “Specials” on the search results pages. If you would not like your rent concession to show up on the search results page or on your listing, then you can select “None/Off,” and this will turn your rent specials off until you go back into your listing and turn them back on. If you don’t have access to this option, then you can turn your concession off by making the end date a past date or deleting all the information about the concession from your listing.

7. Save changes: Scroll to the bottom and click “Save” to apply your updates. After saving, your rent concession will appear on Apartments.com in 2-3 hours.

By carefully following the outlined steps, you can effectively advertise your rental property on Apartments.com with special offers and discounts, making it more competitive in the rental market. Remember to clearly define the details and duration of your concession to ensure transparency and attract interested renters. This strategic approach can help fill vacancies faster and improve overall tenant satisfaction.

Disadvantages of Rent Concessions 

Although rent concessions attract tenants quickly and can improve tenant retention, there are some disadvantages. Some rent concessions will be very hard to take away. Some tenants might want to keep the rent concession after their lease ends. For example, if you give a tenant free laundry use or free parking for a year, they might ask for the rent concession to be applied to the new lease. If you don’t agree to add the concession to the renewed lease, they could decide to move out. Similarly, if you offered a reduced rent when they signed, a tenant might ask to keep the discounted price. As a landlord, you can negotiate and agree to keep the reduced rent price but use your discretion. 

Using rent concessions is also risky. Although it’s unlikely to happen with proper screening, a tenant might cause property damage, pay rent after it’s due, or abandon the property, which could result in eviction. For example, if you used a free deposit as a rent concession, you risk not having money set aside for repairs.  

You can use your lease to protect yourself while using rent concessions. Include when the rent concession will end and the circumstances that would require the concession to be revoked in the lease. You should also send tenants a notice of increase a few months before their lease expires if you previously offered a reduced rent.  

If you include rules and expectations in your lease, rent concessions are an excellent strategy to avoid extended vacancies and retain current tenants. Remember, maintaining vacancies will get expensive and interfere with profit. Get creative, advertise the concession, and you’ll have a profitable rental property in no time!