I have a commercial property leased that is coming up to one year. Lease says CPI increases. I can find information on residential CPI but not commercial. Also if CPI increases annually does this mean the overall CPI? Australia wide? or Vic?
Appreciate any help
Your lease should identify how to calculate it. In a standard LIV lease, for instance, look under the definition in the lease for "Consumer Price Index" and you will see that it states "All Groups" for Melbourne as being the correct CPI figure.
I cannot work out at all. If I take the december quarter to dec quarter its 3.7 on the internet.
On the lease it says AR=R x CPIB
CPIAIf Im getting 1000 per calendah month then what is the increase? Lease started 10 April.
Thanks
You will need to look at the table which gives you the index starting at 100.00 (about 1948?). Then you use the commencing index & current index numbers
Property is too difficult.
I think I will stick to shares in future.
If increase is annually at CPI and rent was $1000 per calendah month beginning April 2008, no one here seems to be able to help me.
It just gets more confusing to me.
The link for the cpi that you need to refer to is http://www.ausstats.abs.gov.au/ausstats/[email protected]/0/0604EDCDC30C40FCCA25754B0014DC34/$File/640101.xls
The second tab Data 1 holds all of the index information.
You simply plug in the two relevant index figures into the formula to get the revised rent,
The info that you are after is:
Base index (Melb Dec 2007) – 158.5
Current Index (Melb Dec 2008) – 163.5Therefore new rent = 163.5/158.5 X $1000 = $1031.55
Check that there isn't a ratchet clause or minimum increase eg clause stating the greater of CPI or 4%
Oh! Thanks so much for that. Now I can look at the table and see where you got this from helps me understand it better.
Much appreciate all peoples help.
The base rate system stops rent increasing exponentially or compounding like 100%+5%=105%, 105%+5%= which escalates and usually becomes litigation .
Many motel leases setup incorrectly have crashed when they became unviable due to rent increasing too high too fast and exceeding the ability of the business to pay it.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
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