How CPI Rent Reviews Work for Commercial Tenants in Australia
A guide to annual rent indexation using Consumer Price Index numbers compiled by the Australian Bureau of Statistics.
Understanding CPI Index Numbers
The CPI is a measure of inflation compiled quarterly by the Australian Bureau of Statistics (ABS). Commercial lease reviews compare the All Groups CPI index number for the quarter ending immediately before the review date with the index number from the same quarter in the previous year.
The CPI Rent Review Formula
New Rent = Old Rent * (Current Quarter CPI / Previous Year Quarter CPI)
The Ratchet Clause Trap
A ratchet clause states that the rent cannot decrease under any review circumstances, keeping rent flat during deflation. While illegal under retail tenancy laws in VIC, NSW, and QLD, they are widely enforced in general industrial warehouse and commercial office leases.
Disclaimer: The estimations and rules detailed on this platform do not constitute legal or financial advice. Always verify metrics with a certified property professional, licensed accountant, or qualified commercial lawyer before entering into or executing any lease contract.