12 May 2020
The recent announcement of the Chancellor, Rishi Sunak, to extend the consultation period for assessing the reform of the Retail Prices Index (RPI) until this summer in view of COVID-19 will give businesses more time to respond on this important issue. Whilst many of the articles about the proposal to align RPI with the Consumer Prices Index plus Housing Costs (CPIH) methodology will focus on the effect it will have on bonds and pension schemes, landlords and tenants will need to be aware of the implications for commercial leases. It has been accepted that RPI will go (or be brought in line with CPIH) from 2030, but the Chancellor has given a clear signal that he is thinking about bringing that date forward to 2025. This makes it relevant for many new leases being agreed now or already in place.