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Home · Property Management · Landlord Forms : What Every Landlord Needs to Know About Tenant Incentive Clauses

Wayne Gathright offers this follow-up to his popular series How to Create a Solid Lease Agreement:

More Tenant Incentive Clauses:  Make Your Lease Agreement a Tenant Satisfaction Agreement

PresentBesides covering the basic lease conditions and provisions, you can also turn your lease into a valuable marketing tool for your business while at the same time providing extra satisfaction for your tenants. You can develop tenant loyalty that will result in longer relationships, on-time payments, better care for your property, assistance with marketing, and possibly an eventual sale to your tenant.

Award Special Benefits to Your Tenants the Longer They Stay

At each tenant lease anniversary, provide a financial or other type of award, provided they are on time with all of their rent payments. This will encourage them to stay with you longer.

  • For example, you can write into your lease that after the first year, upon renewal of the lease, they will receive a special gift, such as a free carpet cleaning or an interior paint job. While this enhances your property, it will improve tenant satisfaction as well.
  • On the second year anniversary, you could offer to plant some new trees or to improve the landscaping in some way. You tenants will know that you care about the property, and this may encourage them to take better care of your property as well.
  • Every year, reward your tenant with something new, and you will develop a long lasting, good relationship with your renter.

Provide Incentives for Your Tenants to Recommend You to Other Prospective Tenants

Many landlords do not use the free marketing tools right at their disposal. If you have a satisfied tenant, that tenant can become a valuable asset for your marketing plans.

  • Add a clause to your lease that provides a bonus to your tenant if he or she recommends someone that signs a lease on another rental property.

The incentive could be in the form of an added appliance, Internet or networking upgrade, ceiling fan, interior painting, or whatever you feel is worth the savings in marketing costs. Be sure to talk to your renters each time they pay rent and find out what their needs are. By providing the right incentives, eventually you will have a team of renters helping you to rent your property.

Provide An Incentive for Your Tenants to Eventually Own the House They Currently Rent

Provided they remain in good standing as a tenant.

  • Offer a small ‘credit’ towards the home purchase each time rent is paid on time. This set amount will be logged into your tenant’s account on paper only and will be used as a lump sum credit only if the tenant buys the house later.

You should write into the lease that the credit can only be used after a set number of years. This will help retain the tenant, and also provide an incentive for the tenant to use the accrued credit after the time period has been reached. You can also stipulate that if the rent is ever late, then the accrued ‘credit’ will revert to zero, and will begin to accumulate on the next on-time payment.

Encourage Your Tenants to Make Upgrades to Your Property if They Have the Skills

  • At the time of the lease signing, ask if the tenant has any professional skills, such a painting, plumbing, landscaping. (You do want a use a professional to insure that the job is done properly and that the worked is insured). If that is the case, you can trade for repairs or improvements.

Installing floorCommonly, you will be able to reduce the rent for improvements or provide other incentives, such as mentioned above. Other jobs such as yard work, posting flyers, minor painting, or installing hanging plants can be done for home purchase credits (see above) or by you providing the materials for the job. Most tenants will be willing to do some work to improve the appearance of their rental if you will provide the raw materials. Be sure to write in your lease that repair and improvement requests are to be made in writing.

By including these items in your lease agreement, the tenant will understand that you care about their rental property and these suggestions can provide opportunities for both you and your tenants to save money. Build these incentives into your residential lease agreement to set the tone for a long, profitable relationship with your tenant.

Wayne Gathright is the President of Tenant File Property Management Software ( and Lease Designer Software (

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