I'm sure many people have seen or heard the term "free rent" at least once.
This means that rent is free for a certain period of time, but since it is not very common for free rent to be included in the terms of a contract, many people may be vaguely wary and wonder, "Is there something mysterious about this property?"
So, in this article, the author, who comes from the real estate industry, will explain the details of free rent properties, which seem like a good deal but are a little creepy, based on his own experience.
Acquire accurate knowledge about free rent and ensure a satisfying move.
What is free rent?
As we have already briefly explained, "free rent" means that rent is free for a certain period of time.
The free period is determined for each contract, but it can be as little as the daily rent from the start of the contract until you actually move in and start living there (about 1-2 weeks), or it can last for several months.
As anyone who has ever moved from one rental property to another will know, it is common for the contract for the property you are moving to overlap with the contract for the property you are moving to, meaning you end up having to pay rent twice.
If you make good use of free rent, it can be very attractive as it can eliminate the double rent that occurs before and after the move.
Moving requires a lot of expenses, such as moving costs and initial costs for the rental contract, so getting free rent is a great help. However, some people may suspect that there is something fishy about it.
Basically, just because there is free rent does not mean that the property has special circumstances such as being a property where an accident occurred.
If you find a property that you are satisfied with that comes with free rent, consider yourself lucky and there is no problem.
Why offer a rent-free period?
Why do landlords offer free rent?
From the landlord's perspective, offering a rent-free period may not seem like there is any benefit, but of course there are benefits for the landlord, so we offer free rent.
The benefit to the landlord is that it becomes easier for people to borrow.
As the number of rental apartments has increased, there are more properties with similar conditions such as location and floor plan, so it has become necessary to differentiate your property in order to have others choose it.
Due to this background, the number of properties with free rent has been gradually increasing in recent years.
However, overall, the number of properties with free rent is still very small.
It's not easy to find a property that also has free rent and is satisfactory. Prioritize conditions such as location and layout, and consider yourself lucky if you find one that has free rent.
What are the conditions for free rent?
It is the landlord who decides whether to offer free rent, and since the aim is to find the next tenant quickly, there are no specific conditions for free rent to be offered.
However, you are more likely to be granted free rent in the following cases:
- Long vacancy period
- The room became vacant during the slow moving season.
- There are more properties with similar conditions
As mentioned above, free rent is often offered when you want to find a tenant quickly or make it easier for them to choose you.
What should I be careful about when renting a property for free?
Just because a property comes with free rent does not mean that it has any special disadvantages, such as a higher rent than other properties or being a property with a history of accidents.
You might think that doing this brings only benefits, but there are some points you should be aware of, so we will explain them here.
Free rent period and initial costs
Make sure to check in advance how long the free rent period will be, in other words, when you will start paying rent.
There's no need to be discouraged if the period is short, but if it's less than a month you may want to try negotiating to extend the free rent period.
Even if the contract includes free rent, you may be required to pay rent in advance when signing the contract.
The advantage of free rent is that it reduces initial costs, but you may need to pay a certain amount in one lump sum.
Payment of management fees and common area charges
If management fees and common area fees are set separately from the rent, you may have to pay these even if the property is rent-free.
Because rent and management fees/common area fees have different purposes, there are cases where management fees/common area fees, which are used for the maintenance and management of the entire building, are not free.
Short-term penalty
Contracts with free rent often include short-term cancellation penalties.
The landlord wants tenants to move in even though they are offering a rent-free period, so there is no benefit for them as a landlord if the tenant moves out soon after.
Generally, if you cancel within one year of signing the contract, you will have to pay a penalty of one to two months' rent. (The amount varies depending on the length of the free rent period, so this is just a guideline.)
Even if you can move at a good price with free rent, if you cancel within a short period of time, you will end up having to pay the same amount of rent as during the free rent period, so it will not be a good deal in the end.
If you think you might move in the short term, be sure to check the free rent period and the conditions and amounts of penalty fees before signing the contract to make sure you won't end up losing money if something does happen.
Is the rent an appropriate amount?
Although it is not very common, there are some properties that offer a higher rent than the market rate and instead offer free rent to create a sense of value.
If you do that, not only will you not get what you pay for, but you may end up losing out the longer you live there.
Compare the rent with properties in the same area with similar conditions to make sure it is a reasonable amount.
About negotiating free rent
Can I negotiate for free rent?
If you have read this far, I hope you understand that although there are some things to be aware of, free rent is generally a good deal.
In that case, many people may wonder, "Is it possible to negotiate for free rent? Is it even okay to negotiate?"
In conclusion, it's a good idea to negotiate.
It is important to be careful, because if you are too persistent, the real estate agency or landlord may refuse to show you any properties, but due to factors such as an increase in rental properties and the ease of searching for rental property information on the Internet, it is now easier to negotiate than in the past.
For example, you can show a property with similar conditions for comparison and let them know you are willing to sign a contract by saying something like "I'll decide on this one if they offer free rent," or you can aim to negotiate for a move during the slow moving seasons (January, June, and November), and you will likely not be turned down without any consideration at all.
Please use this as a reference for negotiating methods that will make it easier for you to get free rent agreed to.
Is it easy to get a rent reduction rejected?
Many people may wonder, if a rent-free period is offered under the term "free rent," isn't that the same as a rent reduction?
It is true that free rent and rent reduction are the same in that they reduce the total amount of rent received from tenants, but rent reductions are more likely to be refused.
The reason is that lowering rents will lead to a decline in property values.
The value (amount) of a rental property when sold is largely determined by the monthly rental income.
For this reason, landlords are reluctant to lower rents.
On the other hand, there are landlords who do not want to lower the rent, but are willing to offer free rent for a certain period of time if it will help them find the next tenant more quickly.
summary
This time, we introduced the system and benefits of free rent.
I hope you understand that just because rent is free doesn't mean it's suspicious, and that it has benefits for both the landlord and the tenant.
If you are thinking of moving, be sure to consider properties with free rent as an option and search for a property that suits you.
