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Net Rent – How Does it All Work?

I have asked Holli Dawson to pen a few pieces around facilities, rent and office space. As SM matures I am seeing more and more folks making the move to their own office space. It can be daunting. Hope this and future articles help!

ServicesIn the world of real estate and housing rental, the term net rent or net lease is where the tenant has to pay alongside the standard rent either an amount of or all of the additional expenses that would in most cases be paid by the owner of the property, usually referred to as the official landlord. Some of the fees and expenses that make up these extras usually include examples such as insurance, utilities, repairs, taxes and countless other depending on the property and its location. 

Exactly which items are to be paid for by the tenant in question will be specified and clearly stated within the official lease agreement long before the tenant starts looking for moving quotes. In the case of properties and buildings that are to be leased to a number of tenants rather than just a single client, which may include shopping centers and entertainment buildings, the additional charges passed onto them for these and other charges will usually be dictated and specified according to their size in square feet.

The actual term itself of net rent or net lease is an entirely different example to that of gross rent or lease. In the gross example, the owner of the property will receive the gross rent from their tenant or tenants, which they must then separate out and use as they see fit to address all of the applicable charges. In the case of net rent, the owner receives the full amount of rent and the extra expenses are taken care of also.

There are a number of different types of net rentals or net leases within the industry, wherein different levels of costs are passed through to tenants as part of the lease.

In the case of a single net rent/lease, the tenants involved are responsible for the paying of all applicable property taxes as well as the based rent.

When the lease is a double net example, tenants are not only responsible for the paying of the rent amount, but also all applicable property taxes and the building insurance. In this example, the landlord or building owner remains responsible for any problems and expenses caused by structural issues.

Coming to the triple net example, this is where the tenant or tenants will not only be responsible for the paying of the rent amount, but also all applicable real estate taxes, the required building insurance as well as the maintenance costs for the property as a whole.

In the case of the bondable lease, sometimes referred to as an absolute net lease or rent, this is most extreme example of them all and requires tenants to pay the standard rent amount along with almost every other expense that could possibly be attributed to the property.

"Holli Dawson is a freelance writer who works in both fiction and non-fiction, with a particular focus on the arts and real estate. Her most recent work has been on behalf of a leading moving company."

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