Can You Charge Index Linked Rent?

Landlords can put up rents in line with inflation as long as a rent review clause exists in a commercial or residential tenancy agreement.  

Having a rent review clause is beneficial to landlords who wish to ensure they continue to charge the market rent and allow for inflation. Index linked rent is generally linked to retail price inflation RPI. While RPI is currently rising it can sometimes fall however this won’t mean that rent needs to be reduced as clauses are generally upward only rather than reducing when the RPI rate falls.  

Disputes sometimes arise when the clause is exercised, often when a RPI is rising rapidly leading to regular increases in rent. Dealing with these disputes can be difficult and it is essential to ensure tenants are aware of the agreement they are entering into.  

As long as your agreement contains the required clauses it should be straightforward to resolve any disputes that may arise over rental payments. Landlords will also benefit from much greater returns if they are able to protect their income from the impact of inflation which can erode rental returns in real terms.  

If you are encountering problems with non-paying tenants call us today for advice on debt recovery.

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