Rent-free periods are the primary landlord incentive in commercial lettings. This guide explains typical rent-free lengths, how they translate to CAT B contribution, and the levers tenants can pull to secure more favourable terms.
By lease term and market conditions Q1 2026:
Higher end on new lettings of voided stock; lower end on renewals where tenant has less leverage.
Landlords may offer rent-free, capital contribution to CAT B fit-out, or a combination. Tenant decision factors:
Capital contribution arrives immediately; rent-free is phased. Cashflow-constrained tenants prefer capital.
Capital contribution is upfront; rent-free depends on lease continuation. Break-clause risk favours capital.
Rent-free is revenue neutral over the lease term; capital contribution is typically deducted against fit-out capital spend. Check with your accountant.
IFRS 16 treats both similarly post-2019, but individual corporate accounting policy varies.
Typical rule-of-thumb: 1 month rent-free ≈ £6–£12 per sqft CAT B contribution (at £72–£144 per sqft annual rent). So 9 months rent-free on a £108 rent ≈ £81 per sqft CAT B contribution.
Initial rent-free is always a negotiating anchor, not the top of range.
Service charge caps, break rights, tenant-option break fees, rent-review basis — all more valuable than an extra month rent-free.
Landlord's CAT A quality directly affects tenant CAT B cost. Poor CAT A = more tenant spend. Negotiate CAT A upgrades as part of package.
Pre-HoT fit-out cost assessment so the rent-free contribution is right-sized to actual CAT B. See Office Fit-Out and CAT A vs CAT B vs CAT A+ guide.
Most tenants take a split — typically 60–70% as rent-free, 30–40% as capital. Smoother cashflow than pure rent-free with more certainty than pure capital.
No — rent-free is a term of the lease. Once heads of terms are signed, it's locked. Negotiate comprehensively at HoT stage.
Typically 30–50% of new-letting equivalent. Renewals have less tenant leverage.
Measured survey and fixed-price quote within 10 working days.