Rent Increase Calculator (CPI & Fixed %)
Forecast future rent costs over 5-10 years comparing Fixed Percentage vs. CPI Indexation methods. Essential for landlords and tenants.
About
Long-term lease agreements often contain clauses for annual rent adjustments. The two most common methods are fixed percentage increases (compounding) and indexation pegged to the Consumer Price Index (CPI). For tenants, understanding the cumulative effect of these clauses is vital for budgeting; a 5% annual increase causes rent to double in just 15 years. For landlords, correct indexation ensures rental income keeps pace with maintenance costs and market inflation.
This tool simulates both scenarios side-by-side, visualizing the divergence over time. It uses historical CPI trends to project variable increases, providing a realistic range of potential future costs compared to a static fixed-rate contract.
Formulas
For Fixed Percentage, the calculation follows the compound interest formula:
For CPI Indexation, the rent adjusts annually based on the index change:
Reference Data
| Year | Rent (Fixed 3%) | Rent (CPI Pegged) | Difference (Annual) |
|---|---|---|---|
| Year 1 | $1,000 | $1,000 | 0 |
| Year 2 | $1,030 | $1,025 (Est.) | $5 |
| Year 5 | $1,125 | $1,104 | $21 |
| Year 10 | $1,304 | $1,250 | $54 |