Rent keeping pace with inflation?
Either as an alternative to the open market rent or in addition, rent reviews are sometimes linked to inflation. The commercial purpose of a rent review to market rent is to enable the landlord’s property to keep pace with changes in the value of money. However, the absence of a standard form of lease together with the legal terminology ‘comparable evidence’ means that tenants can often prevent that happening.
For tenants, the commercial purpose is to ensure the rent is no more or less than the market rent but, in practice, most tenants do not see it like that. For many tenants, the only way the business can remain profitable is when costs are below the going rate. As there is no link between market rent (as defined by the lease) and inflation, an index-linked review comes into its own where evidence is unsupportive or difficult to come by and (presupposing some inflation between review dates) the landlord wants a rent increase regardless.
To measure inflation, the Office for National Statistics (ONS) publishes three indexes: the Retail Price Index known as the RPI, the Consumer Price Index (CPI), and the Consumer Price Housing Index (CPIH).
The Retail Price Index (RPI) measures the change in the cost of a representative sample of retail goods and services. First calculated in June 1947, the RPI used to be the principal official measure of inflation, but has been superseded by the CPI. However, the RPI continues to be used in leases where rent reviews are index-linked because the RPI is generally considered more favourable to landlords, but not for much longer. In November 2020, the then Government announced that, by February 2030, the RPI will be reformed and aligned with the CPIH, using the same data and methods of the CPIH.
Please click here for an explanation of the CPI. The CPIH is the most comprehensive measure of inflation: it extends the CPI to include a measure of the costs associated with owner-occupier housing costs (OCH) and council tax.
The three indexes are usually published on the same date, on or about the 17th day of each month for the previous month. In a well-drafted lease, the Base Index Month and the Index Month is two months before the respective term commencement and review dates. If those dates were one month before, then depending upon the review date, the index might not have been published. Whether it matters that the review could not be started before the index figure is published depends on the wording in the lease. Provided there would be no issue, the only disadvantage of a one month before the review date is in having to wait to calculate the new rent for a notice until sometime during the following month for the index figure to be published.
How to use the Index and Rent Calculator
The pre-set display is for example only. When you click in a field, the pre-set will disappear. The calculator is for information only: no details will be stored.
Click in the box “Please select a year to see the data” will reveal a list of years from 1947 to date. Click your choice of year to reveal a table of that year’s monthly RPI, CPI, CPIH, figures.
(NB: In 1987, the RPI 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)
(NB: In 2005, the CPI rebased to 100 and again in 2015. To compare the index for any month from January 2005 until December 2015 with the figures from January 2005, multiply the index figure by 127.445. To compare the index for any month from January 2016 to date, multiply the index figure by 128.022)
To calculate the percentage change, enter the same index figures for the start and end months. The percentage change for that period will be displayed. It’s not necessary to enter either the Start month/year or End month/year: that information is for your convenience.
To find out how much the rent should be to at least keep pace with inflation according to your chosen Index, in the Enter Rent field, enter the rent that you are receiving/paying at present. Preferably the yearly rent, but the monthly rent might work, provided there are no decimal points. The adjusted rent will be displayed. Please note: the rent you enter must be entered with no £ sign, no commas, no decimal points.
I aim to update the Index figures on the publication day but if, for any reason, I am unavailable, and you need the latest figures urgently, then please visit the ONS website I am unable to answer any questions about the Indexes themselves. Otherwise, please contact me on help@michaellever.co.uk if you require any assistance for using my Index-Linked Rent Calculator.
Next release due: 22 April 2026
Index-Linked and Rent Calculator
The pre-set display is for example only. When you click in a field, the pre-set will disappear. The calculator is for information only: no details will be stored.
To contact me, please email help@michaellever.co.uk or telephone 01531 631892
I look forward to helping you in some way.
Michael Lever