Almost all leases, whether commercial or retail, will contain a
process for increasing the rent once every year. This is known as
the rent review clause. These clauses can be quite technical and
hard for tenants to understand. There are three common methods of
commercial rent review, namely:
- fixed percentage increase;
- consumer price index (CPI) increase; and
- market rent review.
This article will discuss the advantages and disadvantages of
each method to allow you, as a tenant, to make informed choices
about your
lease agreement.
1. Fixed Percentage Increase Review
A 'fixed percentage increase review' is a fixed rent
increase that takes place on specified dates during the lease term.
Usually, this will be each anniversary of the commencement date of
the lease. In practical terms, this means that the rent will
increase by the amount of the fixed review every year on the
anniversary of the commencement date. This amount is usually
between 2-5% of the
