1. What is the CPI Rent Review Formula?

The CPI (Consumer Price Index) Rent Review Formula calculates adjusted rental prices based on inflation measured by the CPI. This method ensures rent increases keep pace with general price inflation, maintaining the real value of rental income.

2. How Does the Calculator Work?

The calculator uses the CPI Rent Review formula:

Where:

• Current Rent — The existing rental amount
• CPI Rate — Percentage change in Consumer Price Index

Explanation: The formula applies the inflation rate to the current rent to determine the adjusted rent amount that maintains purchasing power.

3. Importance of CPI Rent Adjustments

Details: CPI-based rent adjustments are commonly used in commercial leases to provide fair, objective rent increases tied to economic conditions, avoiding arbitrary increases while protecting landlords from inflation.

4. Using the Calculator

Tips: Enter current rent amount in dollars and CPI rate as a percentage (e.g., enter 2.5 for 2.5%). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How often should CPI rent reviews occur?
A: Typically annually, but lease terms vary. Some leases use multi-year averages of CPI changes.

Q2: What CPI index should be used?
A: This depends on lease terms - commonly All Items CPI or sometimes specific components like Housing CPI.

Q3: Are there caps on CPI rent increases?
A: Some leases include maximum (cap) and minimum (floor) increase percentages regardless of CPI.

Q4: How does CPI differ from fixed percentage increases?
A: CPI adjusts to actual inflation, while fixed percentages may over- or under-compensate for inflation.

Q5: Can CPI decreases lead to rent reductions?
A: Only if specified in the lease. Most leases only allow increases, often with a floor of 0% for deflation.