- Glossary
- /Net Effective Rent
NYC rental glossary
Net Effective Rent
The average monthly rent after spreading a concession (free months) across the lease term — lower than the gross rent.
Net effective rent is the rent a tenant effectively pays per month once a concession — typically one or more months free — is averaged over the full lease term. A unit advertised with one month free on a twelve-month lease has a net effective rent of eleven-twelfths of the gross "face" rent.
The gross rent (also called the face rent or legal rent) is what the lease actually states and what the next year’s increase is usually calculated from; the net effective rent is the marketing number that looks lower. The gap between them is the value of the concession spread over the term.
It matters in two directions: tenants should know the rent jumps to the gross figure once the free month is used up, and landlords/brokers tracking achieved rents should not confuse the advertised net effective number with the legal rent of record.
Related terms
- ConcessionA landlord incentive — usually free months — that lowers a tenant’s effective rent without cutting the face rent.
- Broker FeeThe commission paid to a rental broker — now, under the FARE Act, owed by the party who hired the broker.
- Security Deposit (NYC limit)Under HSTPA, a residential security deposit in New York is capped at one month’s rent, with strict return rules.
- Vacancy LeaseThe first lease a new tenant signs on a unit — as opposed to a renewal with an existing tenant.