The CPI and lease agreements

[charttv]

It seems to be standard practice in lease agreements to use CPI as the benchmark for rent increases.

Seeing as the CPI seems to be an imperfect measure of calculating inflation what alternatives can you use? i.e. the CPI may be 5% when in reality it is actually 8% so you are losing out 3% in real terms with your increases.

Anyone factored this in to their agreements and found some other benchmark that is more accurate?

 

[Ridin-High]

I've seen CPI + 1/2/3%

I think possibly if you can neg. a Market rent review during the lease term it would be good

 

[charttv]

I've seen CPI + 1/2/3%

I like this concept. Simple yet effective as the CPI is broadly accurate, the fine tuning at the end brings it more into line with actual inflation.

 

[Ridin-High]

I like this concept. Simple yet effective as the CPI is broadly accurate, the fine tuning at the end brings it more into line with actual inflation.

Yeah i think it all has to do with the market at the time and what tenants are likely to agree to.

But i feel if you haven't got a market rent review in a 5yr + lease you are selling yourself short. Also depends on the other terms agreed to. eg. outgoings payable by tenant