The Hidden Impact of Lease Concessions and Amenities on Effective Rent
The Hidden Impact of Lease Concessions and Amenities on Effective Rent
In the Canadian rental market, the “asking rent” isn’t always the full story. Lease concessions; such as free‑rent months, waived utilities, and enhanced amenities, like parking, gym access, and high‑speed internet. Which can significantly affect the effective rent a tenant pays and the true yield a landlord earns.
What Renters See vs What They Actually Pay
Tenants often focus on headline numbers: “$2,100/month” for a two‑bed unit in a major city. According to Statistics Canada, the average asking rent for a two‑bedroom apartment in Vancouver reached $3,170 in Q1 2025.
But when a landlord offers “one month free” or “utilities included” that $3,170 starts to look different. For example:
If a unit offers one rent‑free month on a 12‑month lease, that’s ~8.3 % reduction in annual rent.
A recent study found the national average value of concessions across Canadian cities was $786/year, representing ~36% of the national average rent of $2,178 in Oct 2023.
What Landlords & Property Managers Should Know
For rental service providers, overlooking concessions and amenity value means inaccurate pricing. Though construction, operating costs, and demand might support higher nominal rents, competition and incentives create downward pressure on effective rent.
In the Canadian context, the Canada Mortgage and Housing Corporation (CMHC) reports that new rental completions are increasing, and vacancy rates are easing, especially in major CMAs.
Therefore, rental service providers are turning to incentives to attract tenants; such as with ads for “free rent”, “moving allowance”, and “utilities included”. These concessions erode what appears to be market rent.
Why Effective Rent Matters for Both Sides
For renters: knowing the difference between advertised rent and effective rent (after concessions/amenities) gives a clearer picture of value.
For rental service providers: it’s setting nominal rents without accounting for concessions, which can lead to lower net yield, longer vacancies, or worse-than expected ROI.
Advertised rent tells part of the story. To understand fair, competitive rental pricing in Canada, it’s important to account for lease concessions and amenities; and their impact on effective rent. For renters, that means asking for clarity. For rental service providers, it means smart pricing: one that balances headline rent, amenities, incentive value, and market reality.