With commercial property, rent reviews are generally to the open market rent, but sometimes the rent would be adjusted to the Retail Price Index (RPI). RPI is generally considered more favourable to landlords than CPI or other methodologies.
There is no link between open market rent and inflation. Calculating the rent by reference to inflation is for academic purposes only and after the event. Whether obtained on a new letting or at rent review or on renewal, the open market rent does not have to keep pace with inflation. Some rent reviews are index-linked but it all depends on the lease.
Even so, it is useful to check whether the rent you are receiving or hoping for is at least keeping pace with inflation, otherwise you might think your investment is doing well when really it’s not.
In service to clients and visitors to my website, I provide an online calculator for working out a) the percentage change in the RPI between one month/year and another; and b) the adjusted rent based on that percentage change.
On my website, you will find all RPI figures from January 1974 onwards. (In 1987, the index was rebased to 100.0. To compare the index for any month from January 1974 until December 1986 with the figures from January 1987, multiply the index figure by 3.945) .
The RPI for each month is normally published by the Office of National Statistics on or about the 17th day of each month, but relating to the previous month, hence, the most recent figure is for December 2014, the January 2015 figure in February next, and so on.
The calculator is for your use only, no information is stored on my website or elsewhere.
Here’s the link – http://www.michaellever.co.uk/research/retailpriceindexrentcalculator/
Using the calculator should be self-evident, but you’ll find instructions for use on the sidebar.
I look forward to helping you in some way.