Answers · Lease incentive
What is a lease incentive?
Direct answer
A lease incentive is a benefit a landlord offers to attract or keep a tenant — commonly a rent-free period, a fit-out contribution, or a rent abatement. It reduces the effective (net) rent below the headline (face) rent, even though the face rent on paper stays higher.
Incentives are why the advertised rent and the rent you actually pay can differ. A landlord may prefer to keep the face rent high (it supports the building's value) while granting an incentive — say several months rent-free or a contribution to your fit-out — that lowers your real cost over the term.
When comparing deals, convert everything to an effective rent: take the face rent, subtract the value of the incentive spread over the lease term, and compare like with like. Incentives are normal and negotiable, and they tend to be more generous when the market favours tenants. Understanding the face-versus-effective distinction keeps you from overpaying or mis-comparing offers.
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