Basic Effective Rent
Enter the base rate, lease term, and concessions — get total effective rent, monthly average, and per m² per month.
Per month. Use a comma for decimals, e.g. 7,2.
Concession Breakdown
List each concession one by one to see its individual impact on effective rent.
Concession list
Compare 2 Offers
Two offers with different rates, concessions, or lease terms — compared apples-to-apples via monthly effective rent.
Target Rent Solver
Have an effective rent target? Compute the base rate you can negotiate, or the maximum concession that still makes sense.
See also
- Rent vs Buy Calculator — compare renting vs buying property.
- Gross Rent Multiplier Calculator — gauge rental property valuation from its gross income.
Frequently Asked Questions
What is net effective rent?
Net effective rent is the average monthly rent cost over the entire lease term after subtracting all concessions from the property owner, such as free months (free rent), renovation allowances (tenant improvement allowance), or moving assistance. The formula: (total rent over the lease term minus total concessions) divided by the number of months in the lease term. This figure is used to compare lease offers on equal footing, because base rent alone does not reflect the concessions granted.
How do you calculate net effective rent?
The steps: 1) Compute total nominal rent = monthly base rate times the number of months in the lease term. 2) Compute total concession value = (free months times base rate) plus TI allowance plus other concessions. 3) Subtract total concessions from the nominal total. 4) Divide the result by the number of months. Example: Rp100,000 per m2 per month times 36 months = Rp3,600,000. Free rent of 3 months worth Rp300,000 plus TI allowance of Rp150,000 gives total concessions of Rp450,000. Total net effective rent = Rp3,600,000 minus Rp450,000 = Rp3,150,000, or Rp87,500 per m2 per month.
Which rent concessions affect net effective rent?
The common ones: (1) free rent, i.e. free rental months at the start or spread across the lease; (2) tenant improvement (TI) allowance, i.e. renovation or fit-out funds from the owner; (3) moving allowance, i.e. relocation assistance; (4) broker commission borne by the owner; (5) free fit-out period before the lease starts. Each concession is essentially a discount that lowers effective rent. This calculator's Concession Breakdown mode itemizes each concession's impact one by one so their individual contributions are visible.
Why is net effective rent lower than base rent?
Because every concession reduces the total actually paid, the monthly average falls too. Example: base rent of Rp100,000 per m2 per month with concessions yields net effective rent of Rp87,500 per m2 per month, which is 12.50% lower. With no concessions at all, net effective rent equals base rent.
How do you compare two different lease offers?
Compare monthly net effective rent, not base rent or the size of the concessions. Example: Offer A at base rent Rp5,000,000 per month for 36 months with 2 months free rent + Rp6,000,000 TI gives effective rent of Rp4,555,555.56 per month. Offer B at base rent Rp4,800,000 per month for 36 months with 1 month free rent gives effective rent of Rp4,666,666.67 per month. Offer A wins despite the higher base rent, by Rp111,111.11 per month or Rp4,000,000 over 36 months. If the lease terms differ, compare per month and also note each side's total commitment.
What is a TI allowance and how is it accounted for?
A TI (tenant improvement) allowance is money from the property owner for renovating or fitting out the leased space. For net effective rent, TI is treated as a concession: total TI is spread evenly (amortized) over the lease term. Example: TI of Rp150,000 per m2 times 50 m2 = Rp7,500,000; amortized over 36 months = Rp208,333.33 per month, which lowers effective rent by Rp4,166.67 per m2 per month.
Is net effective rent only for commercial property?
No. The concept applies to residential leases too, e.g. an apartment offering 1 free month or a boarding-house owner giving an annual-payment discount. The difference is that residential concessions are usually simpler (typically just free rent or a discount), while commercial leases involve TI allowances and broker commissions. This calculator is neutral and works for both. The result is an educational estimate, not financial or legal advice.