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Comment by AnotherGoodName | Hacker News Reader

If you are trying to rent right now the going rate seems to be 2 months free for a 12month contract. So almost 20% off.

I think the reason for the 2 months free is to avoid various rent controls. If they actually gave 20% off they couldn't put the price back up 20% in the future as easily.

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Regarding SF rent control: this commenter sounds like they know what they're talking about and say that landlords in SF cannot beat rent control with temporary free rent offers: https://socketsite.com/archives/2020/06/complimentary-rent-o...

They're wrong. The new rent control law (effective Jan 1, 2020) specifically excludes temporary discounts from the base rate calculation. See section 1947.12:

https://leginfo.legislature.ca.gov/faces/billTextClient.xhtm...

This is a state law and it still allows for stricter city level rent control. If the unit is bound under the stricter SF city rent control, the city rent control law may treat discounts differently?

SF does not count discounts in the base rent: https://sfrb.org/section-372-definitions

The state law does not apply to units that are rent controlled by existing city ordinances.

That doesn't really govern SF rent control. This clause does not override San Francisco's limit, which applies to all pre-1979 buildings and which limits annual increases to CPI inflation. Under SF's program "A rent reduction is permanent and cannot be restored if a new agreement is created between the parties at a lower rent due to market conditions."

Note that SF-style rent control was outlawed statewide in 1995 by Costa-Hawkins. Only cities with existing program at that time can continue them.

Discounts like a free month of rent are not considered a rent reduction for base rate calculations:

https://sfrb.org/section-372-definitions

Which part specifically?

Well you kind of have to read the whole thing, but specifically section a1: “That rent which is charged a tenant upon initial occupancy plus any rent increase allowable and imposed under this chapter”

> landlords in SF cannot beat rent control with temporary free rent offers

> specifically excludes temporary discounts from the base rate calculation

I think you two (three, including "this commenter") are in agreement…

No, we're saying the opposite. The first commenter is saying that the free months of rent would lower the base rate.

The second commenter (me) is saying that those discounts don't count towards the base rate.

SF does not include temporary discounts in their base rate calculation: https://sfrb.org/section-372-definitions

Non-controlled buildings that have other limiting provisions e.g. max 10% annual increase also don't want that nominal rent to go down, so that they can still charge $4500 in year two even if the effective rate in year one was like $3250 due to discounts and gift cards.

I actually think that the tax treatment differs as well - the 2 months free can be treated as a marketing expense, whereas the reduced rent simply results in the lower revenue.

For financed buildings it also keeps the nominal value of the building at the same level - it's still technically "rented" for the same rate, keeping future cash flow projected the same.

At least in my jurisdiction the free months are averaged in to the rent control so in the second year the rent will actually decrease.

Exactly. It's not 20% off. Make them drop the monthly rent by 20%.

That is 20% off.

Drop rent control and they might.

Even without rent control, the "2 months free" offer earns them more revenue, assuming you stay over an year, so I doubt they would just give you the full discount.

Or if you stay less than a year! Since you usually have to pay back concessions ON TOP of any early termination penalty, if you want to break your lease.

Let the place remain tenantless few more months and they will.

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