Industrial property tenants are prone to having greater rents if authorities proposals to abolish upward solely hire critiques change into regulation, 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, they usually might align rents with RPI or CPI at assessment, as commonplace follow.
“Upward solely hire critiques have been commonplace for generations and supply a level of safety for traders that rents won’t be decreased throughout the time period of the lease.
“The federal government believes that abolishing upward solely hire critiques may breathe life into the market, particularly the excessive avenue.”
RPI and CPI each outperforming rental progress for the important thing industrial sectors on a 20-year common.
Foster added: “The federal government ought to be cautious of unintended penalties attributable to the abolishment of upward solely hire critiques as landlords will search various rental mechanisms that would end in greater rents for tenants.
“Our analysis has proven that the owner’s possible default of RPI will increase at assessment may end in greater rents.”
