When contract rent exceeds economic rent, how is the difference referred to?

When contract rent exceeds economic rent, the difference is commonly referred to as excess rent. This term describes the additional amount a tenant pays in rent compared to the prevailing rental rates for similar properties in the market, signifying that the tenant is paying more than what would typically be expected based on market conditions. Economic rent is essentially the rent that property could command in a competitive market setting, reflecting the general demand and supply dynamics.

Excess rent indicates that the lease or rental contract is set at a higher value than what the property would realistically yield under normal market circumstances. This situation can arise in various contexts, such as long-term leases established prior to significant market fluctuations where the contractual obligations do not accurately reflect current economic conditions. Understanding this concept is crucial in real estate assessments and market analysis, as it can impact the valuation and investment decisions made regarding the property.

The other terms do not accurately capture the specific situation when contract rent surpasses economic rent. Aggregate rent pertains to the total amount of rent from multiple tenants, market rent refers to the rental rate for similar properties in a competitive market, and base rent typically refers to the minimum rental amount agreed upon in a lease agreement, without accounting for additional costs or excess.