Effective Rent Calculator

Work out effective rent instantly with clear inputs, formula shown and shareable results.

About Effective Rent Calculator

Effective rent nets every landlord inducement out of the cash actually collected and spreads it over the whole term. A three month rent free period and a fitout contribution on a five year lease can easily represent a ten percent discount to the face rent, which is invisible if only headline rents are compared.

Formula

Effective rent

Effective = (face rent x payable months - inducements) / total term months

Worked example

With the default values below, Effective Rent Calculator returns Effective monthly rent of $86,666.67. Change any input above and every figure here is recalculated in your browser.

Inputs used

Face monthly rentminimum 0: 100,000
Rent free monthsminimum 0 months: 3 months
Lease termminimum 1 months: 60 months
Landlord fitout contributionminimum 0: 500,000

Results

Effective monthly rent: $86,666.67
Total concessions: $800,000.00
Total rent actually paid: $5,700,000.00
Discount to face rent: 13.33% %

Step by step

1Values used
2Effective rent
3Effective monthly rent= 86,666.67
4Total concessions= 800,000.00
5Total rent actually paid= 5,700,000.00
6Discount to face rent= 13.33 %

Assumptions and limits

The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax, fees or charges or compounding frequency into account.
Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

How is the Effective Rent figure worked out?

Effective = (face rent x payable months - inducements) / total term months. Effective rent nets every landlord inducement out of the cash actually collected and spreads it over the whole term.

Which rent do valuers use?

Headline rent for capitalisation, but they apply a market-based allowance for incentives. A property let at face rent with unusually generous inducements will not sustain its apparent value.

What values do I need to enter?

This calculator takes 4 inputs: Face monthly rent, Rent free months, Lease term, Landlord fitout contribution. The pre-filled defaults are a realistic worked example — replace them with your own site or project figures.