{"id":181288,"date":"2023-05-24T04:08:52","date_gmt":"2023-05-24T03:08:52","guid":{"rendered":"https:\/\/legalvision.co.uk\/?p=181288"},"modified":"2024-12-16T23:37:04","modified_gmt":"2024-12-16T23:37:04","slug":"rpi-rent-review","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/commercial-lease-property\/rpi-rent-review\/","title":{"rendered":"Key Considerations Before Agreeing to a Retail Price Index (RPI) Rent Review"},"content":{"rendered":"\n<p>As a tenant with a commercial lease, you occupy a property as your business premises in return for rent. A commercial lease agreement is a legally binding contract between you and your landlord. It details the terms and conditions of your lease, including the lease term and the rental amount. However, the rental amount for your commercial lease can change during your lease if it contains a rent review clause. Rent clauses can vary between commercial leases, some may detail an open market rent review or an index-linked rent review. This article will explain what you should consider as a commercial tenant regarding retail price index rent reviews.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Rent Review&nbsp;<\/h2>\n\n\n\n<p>A rent review occurs when a <a href=\"https:\/\/legalvision.co.uk\/commercial-lease-property\/commercial-rent-review-process\/\">commercial landlord reviews a tenant&#8217;s rent to occupy their property<\/a>. Depending on the lease&#8217;s term, it happens periodically, typically every five years. A rent review usually only results in rent staying the same or increasing<\/p>\n\n\n\n<p>The details of a rent review will be in the <a href=\"https:\/\/legalvision.co.uk\/commercial-lease-property\/rent-review-tenant\/\">rent review clause in the commercial lease agreement<\/a>. This will state, for example:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>the date the rent review will take place;<\/li>\n\n\n\n<li>the rent review process (including the way the new rent amount is calculated);<\/li>\n\n\n\n<li>how you appeal the rent review; and<\/li>\n\n\n\n<li>what happens in case of late payment of the new rent.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>One type of index-linked rent review is a retail price index (RPI) rent review.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Retail Price Index Rent Reviews&nbsp;<\/h2>\n\n\n\n<p>A <a href=\"https:\/\/legalvision.co.uk\/commercial-lease-property\/retail-price-index\/\">retail price index rent review<\/a> is a type of rent review that uses the retail price index (RPI). The RPI measures inflation based on the price of retail goods and services. Its figures are published monthly and calculated based on the typical consumer\u2019s spending. Where inflation rises, so do RPI figures, and where it decreases, the same occurs for RPI figures.\u00a0<\/p>\n\n\n\n<p>Where RPI determines a rent review, the rent is based on the inflation level when the landlord carries out the rent review. Therefore, the percentage of your rent increase will reflect the percentage increase of inflation. However, this can be calculated differently, and tenants should ensure that the chosen method benefits them.&nbsp;<\/p>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p style=\"text-align: left\">For example, this might compound annually or be planned as a single increase over the term based on the total RPI change. The total increase b<span style=\"font-weight: 400\">etween these two approaches will mean a significantly different amount.<\/span><\/p>\n<\/div>\n\n\n\n\n<a href=\"#content-next\"\n   class=\"block p-4 mt-10 text-xl font-bold text-center text-white no-underline bg-gray-800 rounded-t-xl\">\n    Continue reading this article below the form\n    <i class=\"text-xl fa-regular fa-arrow-down\"><\/i>\n<\/a>\n<div class=\"px-6 pt-10 pb-12 mb-10 text-center bg-gray-100 rounded-b-xl sm:px-12 test\">\n    <div class=\"mb-8 text-2xl font-bold text-orange\">\n        Need legal advice?\n        <br>\n        <span class=\"text-lg not-prose\">\n                            Call <a href=\"tel:+448081968584\" class=\"not-prose\">0808 196 8584<\/a> for urgent assistance.\n                <br>\n                Otherwise, complete this form, and we will contact you within one business day.\n                    <\/span>\n    <\/div>\n\n    \n\n<div class=\"not-prose flex justify-center text-left 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If the lease agreement specifies that the rental amount is subject to change per the <a href=\"https:\/\/www.ons.gov.uk\/economy\/inflationandpriceindices\">RPI<\/a>, there are key considerations to note.&nbsp;&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Current Inflation Levels<\/h3>\n\n\n\n<p>RPI rent reviews mean your landlords will assess the rental amount based on inflation. Consequently, before you enter a commercial lease with an RPI rent review, you should consider current inflation levels. In the past, RPI has mostly stayed the same. However, since 2022, it has risen sharply. This means that your rent may increase considerably.&nbsp;<\/p>\n\n\n\n<p>Importantly, your commercial lease agreement is a legal contract you must follow. So, if your rent increases and any appeal of this is unsuccessful, you have to commit to a higher rental price.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">A \u201cCap\u201d<\/h3>\n\n\n\n<p>If your landlord includes an RPI rent review in the commercial rent agreement, consider negotiating a \u201ccap\u201d on any increase. This means that where inflation suddenly rises rapidly, you can be confident that the rise will never go above a capped figure.<\/p>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p>However, your landlord may only agree to this by including a rent review \u201ccollar\u201d, which states a minimum amount the rent must increase. Tenants should carefully consider whether the \u2018collar\u2019 would be higher than the RPI and should financially plan for this in advance.<\/p>\n<\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Break Clause<\/h3>\n\n\n\n<p>Where your landlord wants to include an RPI rent review clause in your commercial lease agreement, you might negotiate to include a break clause so you can exit the lease if the proposed rent increase is too high. Most break dates will be set to after the date the review is to occur, but, as you will have a good idea of how RPI is trending, including a break is a good risk mitigation strategy to avoid a sharp rent increase.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Dispute Resolution<\/h3>\n\n\n\n<p>The lease usually includes a <a href=\"https:\/\/legalvision.co.uk\/commercial-lease-property\/steps-lease-dispute\/\">dispute resolution provision<\/a> as part of the rent review clause. Typically, this will consist of appointing a surveyor to review any disagreement on the increased rent. Some leases can also state that the rent increase is at the landlord\u2019s absolute discretion, in which case tenants are bound by the landlord\u2019s assessment except where there is an error, or it is contrary to the law.\u00a0<\/p>\n\n\n    <div class=\"my-7 lg:my-10 border-y-2 border-gray-100 py-7 lg:py-10 flex flex-col sm:flex-row items-start gap-10\">\n                    <img decoding=\"async\" class=\"w-52 mx-auto my-0! rounded\" src=\"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/4\/2023\/05\/04050959\/LegalVision-Landlords-Cheatsheet-for-UK-Leasing-Terms.jpg\" alt=\"Front page of publication\"\n                 loading=\"lazy\" width=\"208\" height=\"298\">\n                <section>\n            <div class=\"text-2xl font-bold\">Cheatsheet for UK Leasing Terms<\/div>\n            <div class=\"body-text\">\n                <p>This cheatsheet includes practical tips to understand key clauses and avoid disputes in leasing agreements.<\/p>\n            <\/div>\n            \n\n<a href=\"https:\/\/go.legalvision.co.uk\/cheatsheet-uk-leasing-terms.html\" class=\" block px-5 py-3.5 max-w-fit bg-orange button__hover transition rounded text-white font-bold text-lg no-underline uppercase leading-tight text-center\" target=\"\" rel=\"\">Download Now<\/a>        <\/section>\n    <\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\">Key Takeaways<\/h2>\n\n\n\n<p>An RPI rent review is where your landlord reviews the rental amount you pay in line with the retail price index. The RPI is based on inflation, such as changes to the price of goods and services. As an outcome, your rental costs will change, and you will have to pay an increased cost.\u00a0<\/p>\n\n\n\n<p>Before you commit to a lease with an RPI rent review, you should consider recent increases in inflation. Rapidly rising inflation will impact the rate at which your rental amount increases. Therefore, you might wish to negotiate a cap on the rental increase or negotiate the inclusion of a break clause.<\/p>\n\n\n\n<p>If you need help understanding retail price index rent reviews as a commercial tenant, our experienced <a href=\"https:\/\/legalvision.co.uk\/leasing-lawyers-lp\/\">leasing lawyers<\/a> can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on <a href=\"tel:+448081968584\" class=\"AVANSERnumber dynamic-number\">0808 196 8584<\/a> or visit our <a href=\"https:\/\/legalvision.co.uk\/membership\/\">membership page<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Frequently Asked Questions<\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1734176678100\"><strong class=\"schema-faq-question\"><strong>What is a rent review?<\/strong><\/strong> <p class=\"schema-faq-answer\">A rent review is where a commercial landlord assesses the tenant&#8217;s rent and then adjusts it.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1734176683985\"><strong class=\"schema-faq-question\"><strong>What is a retail price index rent review?\u00a0<\/strong><\/strong> <p class=\"schema-faq-answer\">A retail price index rent review is a type of rent review in which the landlord assesses the rent based on the retail price index (RPI).<\/p> <\/div> <\/div>\n\n\n\n\n<div class=\"not-prose m-feedback-prompt\">\n    <!-- Thumbs up\/down bar -->\n    <div class=\"m-feedback-prompt__main\">\n        <div class=\"m-feedback-prompt__title\">Was this article helpful?<\/div>\n        <div>\n            <!--span class=\"m-feedback-prompt__button--text\">Thanks!<\/span-->\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--yes\"\n                    data-analytics-link=\"feedback-prompt:yes\" aria-label=\"Agree\">\n                <i class=\"fa-regular fa-thumbs-up fa-3x\"><\/i>\n            <\/button>\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--no\"\n                    data-analytics-link=\"feedback-prompt:no\" aria-label=\"Disagree\">\n                <i class=\"fa-regular fa-thumbs-down fa-3x\"><\/i>\n            <\/button>\n        <\/div>\n    <\/div>\n\n    <!-- Feedback form -->\n    <div class=\"m-feedback-prompt__form\">\n        <div class=\"m-feedback-prompt__form--thanks \">\n            <div>Thanks!<\/div>\n            <p>\n                We appreciate your feedback \u2013 your submission has been successfully received.            <\/p>\n        <\/div>\n        <form id=\"contact-form\" class=\"m-feedback-prompt__form--form\" action=\"\" method=\"post\">\n            <input type=\"hidden\" id=\"authenticity_token\" name=\"authenticity_token\" value=\"9eb4f72322\" \/><input type=\"hidden\" name=\"_wp_http_referer\" value=\"\/api\/wp\/v2\/posts\/181288\" \/>            <input value=\"https:\/\/legalvision.co.uk\/commercial-lease-property\/rpi-rent-review\/\" type=\"hidden\" name=\"currenturl\"\n                   id=\"currenturl\">\n            <input value=\"Key Considerations Before Agreeing to a Retail Price Index (RPI) Rent Review\" type=\"hidden\" name=\"currenttitle\"\n                   id=\"currenttitle\">\n            <label>\n                <!-- display on thumbs-up -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--yes\">\n                    Can you tell us <span class=\"font-semibold\">why<\/span> you found it helpful?\n                <\/span>\n\n                <!-- display on thumbs-down -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--no text-lg\">\n                    How can we better improve this article?\n                <\/span>\n                <textarea name=\"feedbackmessage\" id=\"feedbackmessage\" required><\/textarea>\n            <\/label>\n\n            <div class=\"m-feedback-prompt__form--error\" id=\"form-submit-error\"><\/div>\n            <button id=\"submit-contact-form-button\" type=\"submit\" name=\"commit\" class=\"m-feedback-prompt__form--submit\"\n                    data-analytics-link=\"feedback-prompt:submit\">\n                Submit            <\/button>\n        <\/form>\n    <\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>As a tenant with a commercial lease, you occupy a property as your business premises in return for rent. A commercial lease agreement is a legally binding contract between you and your landlord. It details the terms and conditions of your lease, including the lease term and the rental amount. However, the rental amount for<a href=\"https:\/\/legalvision.co.uk\/commercial-lease-property\/rpi-rent-review\/\">Continue reading <span class=\"sr-only\">&#8220;Key Considerations Before Agreeing to a Retail Price Index (RPI) Rent Review&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13511,"featured_media":3208,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"176441,1790,176163,1758,179279,174973","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[30],"tags":[21,516,1224,1257,1293,1377],"class_list":["post-181288","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commercial-lease-property","tag-medium-business","tag-rent-review","tag-commercial-tenant","tag-break-clause","tag-retail-price-index","tag-rpi-rent-review"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Key Considerations: RPI Rent Review | LegalVision UK<\/title>\n<meta name=\"description\" content=\"An RPI rent review is where your landlord reviews the rental amount you pay in line with the retail price index. 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