How to create a Rent-Free Periods (Rent Abatements)

Rent-free periods—also known as rent abatements—are used in commercial leasing to incentivise tenants or compensate them for specific costs. This article outlines common rent-free scenarios and the approved methods for processing them in Cirrus8.

Common Rent-Free Scenarios

1. Lease-Incentivised Rent-Free
A rent-free period defined in the lease, typically at commencement, offered as an incentive (e.g. three months rent-free to assist with fit-out costs).

2. Compensation-Based Rent-Free Credit
A rent-free credit provided to reimburse a tenant for costs paid on behalf of the landlord, such as repairs or improvements.

Processing Rent-Free in Cirrus8

Method 1: Lease Charge as a Negative Amount

A recurring rent abatement set up as a negative lease charge (full or partial).

• Use case: Lease-incentivised rent-free periods

• Tenant invoice: Shows rent and abatement, with a reduced amount payable

Steps (summary):
Leases > Lease Summary > Charges and Rent Reviews > Lease Charges → add a new charge using the Rent Abatement account code, set as a rent charge with the same frequency as rent.

Method 2: Accounts Receivable Credit

A credit issued to the tenant’s account, applied against rent as required.

• Use case: Compensation-based rent-free credits

• Tenant invoice: Rent remains unchanged; credit is applied separately

Steps (summary):
Raise an Accounts Receivable Credit for the agreed amount. Apply it to rent using a zero receipt if required.