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Rent Increase Formula:
The Retail Price Index (RPI) rent review calculates rent increases based on inflation rates, commonly used in commercial leases. It provides a transparent method for periodic rent adjustments tied to economic indicators.
The calculator uses the RPI rent increase formula:
Where:
Explanation: The calculation determines the rent increase amount by applying the RPI percentage to the current rent, then adds this to the current rent to show the new rental amount.
Details: RPI-linked rent reviews provide predictable, inflation-adjusted rent increases that protect landlords from inflation while offering tenants reasonable, market-aligned adjustments.
Tips: Enter the current RPI percentage (e.g., 3.5 for 3.5%) and the current rent amount. The calculator will show both the increase amount and the new total rent.
Q1: What's the difference between RPI and CPI?
A: RPI (Retail Price Index) and CPI (Consumer Price Index) are different measures of inflation. RPI typically includes housing costs and tends to be higher than CPI.
Q2: How often are RPI rent reviews conducted?
A: Typically annually, but this depends on the lease terms. Some leases may specify longer review periods (e.g., every 3 or 5 years).
Q3: Can RPI increases be capped?
A: Yes, many leases include caps (maximum increases) and collars (minimum increases) to protect both parties from extreme inflation scenarios.
Q4: Is RPI still commonly used in leases?
A: While some newer leases use CPI, RPI remains common in existing commercial leases, particularly in the UK.
Q5: How is the RPI percentage determined?
A: RPI is an official statistic published monthly by government statistical agencies, measuring the change in prices of goods and services.