Ground Rent Calculation

paul_mx

Hi

This is my first post and I've been reading the forum regularly for a while now.
I'm trying to get some clarity on what the potential increase would be for Ground rent.
Below is the lease conditions and I've tried to calculate but not sure it's correct.

Base rent (£300)
Base RPI (Jun 2018) 2.3%
Base RPI Month (april 2013) 2.2%

Base Rent x RPI = 6.9
Product/Base RPI Month £314

Base Rent + Increase = £614 (not sure if the new value would just be £314 or if I need to add it up to the base rent?)

Definitions
Unless the contrary intention appears, the following definitions apply in this
schedule:
“Base RPI Month” means the monthly figure shown in the Index for the month two
months before the Review Date in the year preceding the previous Review Date
“Base Rent” means rent of £300 per annum
“Interest Rate” interest at the base rate from time to time of Barclays Bank plc or if
that base rate stops being used or published then at a comparable commercial rate
reasonably determined by the Landlord
“RPI” means the Retail Prices Index or any official index replacing it.
“Review Date” means 1 January 2022 and every 10th anniversary of that date.

Review Of The Rent
3.2 The amount of Rent shall be reviewed on each Review Date to:
3.2.1 the Rent payable immediately before the relevant Review Date (or which
would then be payable but for any abatement or suspension of the Rent
or restriction on the right to collect it) or if greater

3.2.2 the indexed rent determined pursuant to this clause.

3.3 The indexed rent shall be determined at the relevant Review Date by multiplying the
Base Rent by the All Items index value of the RPI for the month two months before
the month in which the relevant Review Date falls, then dividing the product by the
All Items index value of the RPI for the Base RPI Month.

Thanks in advance

Tom99

Base RPI index value (April 2013) = 249.5
RPI index value 2 mths before review date, so that's November 2021.
It won't be, but lets assume that index value is 281.5 (ie the June 2018 figure)

New rent at review:
£300 x 281.5/249.5 = £338.48

The has been a 12.83% increase in the RPI index between the two respective dates, so that is by how much the ground rent is increased at the review date.

You use the index value in the calculation, not the annual price inflation at that point.

For a simple list of past RPI index values see here:

http://www.wolfbane.com/rpi.htm

Or to download the official figures see here:

https://www.ons.gov.uk/economy/inflationandpriceindices/datasets/consumerpriceinflation

On the official set, RPI is Table 36

paul_mx

Thank you so much, this was very helpful.