Industrial property tenants are vulnerable to having increased rents if authorities proposals to abolish upward solely lease evaluations change into legislation, analysis from Watling Actual Property has revealed.
Joint managing director Andrew Foster stated the federal government ought to be cautious of unintended penalties as landlords would react to safe their investments.
Foster stated: “Landlords will search to minimise the influence of any laws change, and so they might align rents with RPI or CPI at assessment, as normal follow.
“Upward solely lease evaluations have been commonplace for generations and supply a level of safety for traders that rents is not going to be diminished through the time period of the lease.
“The federal government believes that abolishing upward solely lease evaluations may breathe life into the market, specifically the excessive road.”
RPI and CPI each outperforming rental progress for the important thing business sectors on a 20-year common.
Foster added: “The federal government ought to be cautious of unintended penalties brought on by the abolishment of upward solely lease evaluations as landlords will search various rental mechanisms that would end in increased rents for tenants.
“Our analysis has proven that the owner’s doubtless default of RPI will increase at assessment may end in increased rents.”
