Lease Rent Free Period Value Calculator

Work out lease rent free period value instantly with clear inputs, formula shown and shareable results.

About Lease Rent Free Period Value Calculator

A rent free period is a discount disguised as a timing concession. Its nominal value is simply the waived rent, but because it falls at the start of the lease its present value is close to nominal. Spreading the payable rent over the full term gives the effective rent, which is what should be compared between competing offers.

Formulas

Concession value

Nominal = monthly rent x rent free months; present value discounts each waived month

Effective rent

Effective = face rent x (term - free months) / term

Worked example

With the default values below, Lease Rent Free Period Value Calculator returns Present value of the rent free period of $296,180.58. 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
Annual discount rateaccepts 0–30 %: 8 %

Results

Present value of the rent free period: $296,180.58
Nominal value of the concession: $300,000.00
Effective monthly rent: $95,000.00
Concession as share of face rent: 5.00% %

Step by step

1Values used
2Concession value
3Effective rent
4Present value of the rent free period= 296,180.58
5Nominal value of the concession= 300,000.00
6Effective monthly rent= 95,000.00
7Concession as share of face rent= 5.00 %

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 or fees or charges 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 Lease Rent Free Period Value figure worked out?

Nominal = monthly rent x rent free months; present value discounts each waived month. A rent free period is a discount disguised as a timing concession.

Why do landlords prefer a rent free period to a lower rent?

Because the headline rent sets the valuation. A property capitalised on face rent is worth more than one on a lower passing rent, even if the cash received is identical.

What values do I need to enter?

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