Index Link Lease For Free

A retail price index rent review is a type of rent review that uses the retail price index (RPI). RPI is a method with which to measure inflation. The price of goods and services determines RPI, and these can change monthly.

A clause providing for annual changes to the rent payable under a lease. The clause is drafted on the basis that the rent will change based on the Retail Prices Index, although a different index can be specified.

The most common index is the CPI for ?All Urban Consumers,? but there are a variety of other indexes specific to various goods or industries. Timing of adjustment.

A standard lease contract typically contains an inflation clause (or rent indexation), which adjusts the rent on an annual basis based on the development of inflation. It is an integral part of a lease contract.

An index linked rent review is simply a rent review clause that is linked to an index that tracks inflation, notably RPI and CPI.

One method is the retail price index rent review. For this type of review, a landlord bases the rental amount on the RPI, set from goods and services inflation. However, a landlord may cap any increase by an ascertained amount and ensure the rent does not fall below a minimum amount.

For example, let's say a tenant signs an index lease for a commercial property with a base rent of $1,000 per month. The lease agreement states that the rent will increase by 2% for every 1% increase in the consumer price index.

Variable lease An index lease ties the rent amount to an index of some kind. In general, that index is the Consumer Price Index, but it may also be tied to local rental market conditions. For example, a renter in a large urban center may negotiate a yearly rent review based on the average office rent in the city.