usually investment expenditures can be tax deducted, so your landlord is also using this expense as a way to lower his tax rate. It's effectively transferring income tax into capital gains tax (which presumably is lower and more efficient).

By making the rent slightly lower, the landlord is sure to get a renter to cover most of the costs. But if the economic situation declines (or interest rates rises), he can just bump up the rent to cover the increase.