A commercial rent review is a mechanism within a lease that allows the rent to be adjusted at predefined intervals, usually every three or five years. The purpose of a rent review is to ensure that the rent payable reflects either changes in inflation or prevailing market conditions, depending on the wording of the lease.

The Commercial Rent Review Calculator above has been designed to provide a clear and illustrative indication of how a rent review may affect annual and monthly rental income. It is intended as a guidance tool for landlords and tenants who want to understand potential outcomes before taking professional advice.

Commercial rent reviews generally fall into two broad categories.

Index linked rent reviews, where rent increases are linked to an inflation index such as CPI or RPI.

Open market rent reviews, where the rent is assessed by reference to comparable lettings and market evidence at the review date.

Some leases also include fixed uplifts, collars, caps or hybrid mechanisms such as CPI or RPI, whichever is higher.

The specific wording of the lease will always determine how a rent review is applied in practice.

The calculator uses your current annual rent and applies the selected review mechanism over the stated review period. It then produces an estimated new annual rent, together with the change in rent and a monthly equivalent figure.

For index linked rent reviews, the calculator applies an assumed annual rate of inflation over the review period. Both compound and simple indexation methods are available, reflecting common lease drafting approaches. Where selected, collars and caps are applied to limit the total increase or decrease over the review period.

For fixed rent reviews, the calculator applies a fixed percentage uplift across the review period.

For open market rent reviews, the calculator allows the user to input an estimated open market rent directly or calculate it using area and rent per square foot. Where an upward only review is selected, the calculator ensures that the rent does not fall below the current passing rent.

CPI and RPI rent reviews are commonly used in modern commercial leases as an alternative to open market reviews.

CPI linked rent reviews typically track consumer price inflation and are often viewed as more stable and predictable.

RPI linked rent reviews generally produce higher increases over time but can be more volatile.

Some leases are drafted to apply CPI or RPI, whichever is higher, which can materially affect rental growth over longer review periods.

The calculator allows landlords to test different inflation assumptions to understand how sensitive the reviewed rent may be to changes in economic conditions.

Open market rent reviews aim to align the rent with prevailing market evidence at the review date. This process usually involves analysing comparable lettings, adjusting for lease length, incentives, covenant strength and property condition.

The calculator provides a simplified illustration of an open market rent review and should not be treated as a substitute for a properly evidenced market assessment.

In practice, open market rent reviews are often subject to negotiation between landlord and tenant, particularly where the lease contains assumptions, disregards or an upward only provision.

For mixed use properties such as a shop with a flat above, it is important to understand which elements of the income are reviewable and whether residential income is excluded from the review mechanism.

Rent review outcomes can be influenced by a wide range of factors, including location, condition, use, lease terms, tenant covenant and wider market conditions.

Landlords should also be mindful of lease drafting nuances such as interim rent, time limits for serving notices and the impact of improvements carried out by the tenant.

The Commercial Rent Review Calculator is provided for general guidance only. It does not constitute legal or valuation advice and should not be relied upon to determine the outcome of a rent review. Actual rent review outcomes will depend on the precise wording of the lease, the quality of market evidence, negotiation strategy and professional judgement. Shepherd Commercial accepts no liability for any reliance placed on the calculator outputs. Landlords and tenants are advised to seek professional advice from a qualified surveyor before agreeing or implementing a rent review.

A chartered surveyor can provide advice on market evidence, lease interpretation and negotiation strategy, helping to achieve a fair and defensible rent review outcome. Professional advice is particularly important where there is a material increase or decrease in rent, where the lease wording is complex, or where the property forms part of a wider investment or portfolio.