Can commercial rent be increased during the lease?

A $50,000 rent today could be $65,000 in five years depending on the “Rent Review” mechanism in your lease. These increases usually happen on the anniversary of the lease commencement date.

1. Fixed Percentage Review

This is the simplest method. The rent increases by a set amount (e.g., 3% or 4%) every year.

• Pros: Total certainty. You know exactly what your rent will be in year 5.
• Cons: If the economy slows down and market rents drop, you are still stuck with the increase.

2. CPI (Consumer Price Index) Review

The rent increases in line with inflation (the cost of living).

• Pros: Your rent stays “fair” relative to the value of money.
• Cons: If inflation spikes (as seen recently), your rent can jump significantly without warning.

3. Market Rent Review

Usually happens at the end of a term or upon the exercise of an Option to Renew. The rent is reassessed based on what a willing tenant would pay for a similar property in the current market.

• The Dispute: If the landlord says the rent should go up 20% and you disagree, the lease should have a mechanism to appoint an independent valuer to decide.

4. The “Ratchet Clause” Trap

A ratchet clause states that the rent can only go up or stay the same—it can never go down, even if the market crashes.

• Important: Ratchet clauses are illegal in Retail Shop Leases in Queensland.¹ If you are a retail tenant, your rent can legally decrease during a market review if the market has fallen.

Related Topics

• Outgoings Explained
• Retail Shop Lease Protections
• Commercial Law Practice Area

Budgeting for Growth

We help you model these increases over the life of the lease. If a 4% fixed increase is too aggressive for your startup, we negotiate for CPI-linked reviews or a cap on market increases.

Worried about a rent hike? Contact Bell & Senior to discuss your options. Call (07) 5532 8777.