An RPI-linked rent review adjusts rent by reference to movements in the Retail Prices Index using the formula stated in the lease.
Check the base and comparison index
The lease should identify the relevant base month or index figure and the comparison month or figure. Small drafting differences can materially affect the calculation.
Caps and collars
Some index-linked reviews impose a maximum or minimum annual increase. The calculation must apply the contractual cap or collar in the manner required by the lease.
Not an open-market valuation
An RPI calculation does not establish market rent. An indexed rent can be above or below the rent that would be achieved on an open-market letting.
Practical calculation point
For any index-linked review, record the precise index series, base period, comparison period, review frequency and any cap, collar or rounding provision before carrying out the calculation. The lease mechanism governs the rent actually payable.