We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What Is Fair Market Rent?

Mary McMahon
Updated Jan 25, 2024
Our promise to you
WiseGeek is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGeek, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Fair market rent is the amount of rent a property could reasonably fetch, given the current market, location, and other conditions, if it were made available for rent or lease. Property owners use fair market rent data to decide how much they should charge, and make adjustments as necessary, such as lowering rent in a slow economy where renters may have more options. This value can also be important for government benefits awards, as housing assistance depends on fair market rent.

In any given region, government agencies maintain rental statistics. They will provide information about average rents and often offer it in the form of percentiles so landlords can see where a rent falls within the community. Fair market rent typically falls around the 40th or 50th percentile. These statistics can also break down numbers by type of dwelling and location to provide more detailed information. A three bedroom house, for example, should fetch more in rent than a studio, while a house in a desirable location will cost more than a comparable home in a lesser area.

For landlords, the fair market rent can determine how much to ask for a new rental, and how much to negotiate when discussing rent increases and other changes with tenants. The landlord wants to advertise the property at an appealing price, without making the price too low. Property buyers considering investment purchases must also consider the rent they are likely to be able to charge, as it will determine whether they can pay back the loan and generate a profit.

Government benefits peg housing allowances to fair market rent. The goal of such benefits is to help low income people with rentals, not to put them in any rental they want. The government provides money appropriate for the fair market rent in the area, and the applicant must pay additional rent out of pocket. These benefits allowances undergo regular adjustment to compensate for cost of living increases, especially in areas where there is a great deal of growth and rents may be trending upward.

Sometimes fair market rent is a consideration for tax rates as well. Tax authorities may have an interest not in the stated value of the property, but in how much money it can bring in during the course of a given year. Information on reasonable rent rates will allow the tax collector to determine how much money the property should be generating, so she can price the tax bill accordingly.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a WiseGeek researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments
Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.