Rent-free… wow! Sounds perfect, right? But take care with this one – it’s not always quite what it seems. So, what does a rent-free period mean in a lease – and should you take it? Let’s break it down.
Why landlords offer rent-free periods
Rent-free periods are commonly offered by landlords on longer-term office leases, typically three years or more. These incentives are usually given for one of two reasons:
- To help with fit-out costs: You’re still paying service charge and business rates, but the landlord waives rent for a set period while you get your new office ready.
- To sweeten the deal: Sometimes, if a space is proving tricky to let, landlords offer rent-free periods as an added incentive to get you through the door.
Sounds great so far. So what’s the catch?
Don’t let the free rent cloud your judgement
Here’s the key thing: rent-free periods aren’t always “free” in the long run.
It’s not unusual for a landlord to offer a generous rent-free period… while quietly pushing for a higher overall rent level. Over the course of your lease, they might recoup that “free” rent – and then some.
So yes, rent-free periods can be a great perk – but only if the rent itself is fair.
The smart move: start with the right rent
Before you get swayed by a few months of rent-free office space, stop and ask: “What should the rent actually be for this office, before we even talk about incentives?”
That’s your starting point. Only once you’ve established a fair market rent can you assess whether the rent-free period being offered is genuinely in your favour.
Should you take a rent-free period?
Yes – as long as it’s a true incentive, not a trade-off for inflated rent.
This is where expert advice pays for itself. A good office agent will:
- Benchmark the proposed rent against similar deals in the area
- Help you calculate the true value of the rent-free period
- Negotiate to get you the best commercial terms overall, not just the shiny headline offer
Final thoughts: rent-free can be smart – but only if the numbers stack up
What does a rent-free period mean in a lease You should now have a full understanding of the answer to that question. A rent-free period might be a genuine benefit, or it might just be smoke and mirrors. Get expert advice, run the numbers, and above all don’t let the excitement of “free” cloud your decision.
This is just one piece of the puzzle. We’re constantly answering the most important office search questions. See what else we’ve covered and what’s coming next.
For more essential tips and advice, have a look at The Knowledge - and for answers to your questions about London office space, check out our FAQs.
Michael Fraser
Michael started in the London property market in 1970. He has an extensive knowledge of the locations, owners & rental values within the office market hub.