If you’re leasing, buying, or investing in Australian commercial property, the rent review clause buried in the lease is one of the most consequential (and sometimes least understood) parts of the deal. It determines whether your rent tracks inflation, jumps by a fixed amount every year, or resets entirely to whatever the market will bear. And in a year where interest rates have reversed course and vacancy is diverging sharply by precinct, which review type you’re locked into matters more than usual.
Here’s a breakdown of the review structures you’ll actually see in the Australian market.
1. Fixed (Flat) Rent Review
A fixed review increases rent by a pre-agreed percentage at each review date, regardless of what’s happening in the market.
In Australia, this is the most common structure in retail and industrial leases, typically sitting in the 3-4% per annum range. Landlords and tenants both like it because it’s simple: no valuations, no disputes, no surprises. The trade-off is that it can drift away from the real market (under-shooting rent growth in a hot market or over-shooting it if the market softens).
2. CPI Rent Review
A CPI-linked review ties rent increases to the Consumer Price Index, so rent moves in line with actual inflation rather than a flat guess.
This structure is common in longer-term leases and in government or institutional tenancies, where predictability and a defensible link to real economic conditions both matter. It’s particularly relevant right now: with inflation running hotter than forecast through 2026 and the RBA reversing its rate-cutting cycle, CPI-linked rents are increasing faster than many landlords budgeted for when they signed longer leases a few years back.
3. Market Rent Review
A market review resets the rent to current market value, usually determined by valuation, negotiation, or if the parties can’t agree an independent valuer or arbitration process set out in the lease.
This is the structure most exposed to what’s actually happening in the property cycle. It shows up most often at option renewal points in office and larger retail leases. Right now, that exposure cuts both ways: prime CBD assets in cities like Brisbane and Adelaide have kept rents firm despite headline vacancy sitting above 10%, while secondary stock in weaker precincts is far more likely to see a market review land below face rent expectations.
4. Ratchet Clauses
A ratchet clause (usually paired with a market or CPI review) prevents rent from decreasing at review, even if the market rent has genuinely fallen.
This is the clause that gets the least attention when a lease is signed and the most attention when the market turns. Landlords rely on it to protect income in a softening market. Tenants are increasingly pushing back on it during negotiations, particularly where market data clearly shows rents have moved lower.
Importantly, ratchet clauses aren’t valid everywhere. Retail leasing legislation in several states restricts or voids them in protected retail leases including the Retail Leases Act 1994 (NSW), the Retail Leases Act 2003 (VIC), and the Retail Shop Leases Act 1994 (QLD), each with jurisdiction-specific exceptions. Outside retail leasing, in standard commercial and industrial leases, ratchet clauses are generally enforceable. Worth checking which category your lease falls into before assuming a ratchet clause will (or won’t) hold up.
5. “Greater Of” and Combination Reviews
Some leases combine two mechanisms and apply whichever produces the higher rent, for example, “the greater of CPI or 3% per annum.”
This structure has become more common as landlords look to hedge against low-CPI environments while still capturing upside if inflation runs hot. It’s effectively a landlord-favourable variation on the fixed/CPI split, and worth flagging to tenants who assume a CPI clause caps their exposure.
Which Review Type Favours Who?
In general:
- Fixed reviews favour whichever party’s guess about future rent growth turns out to be closer to reality. Genuinely neutral on paper, but can quietly favour landlords in flat markets.
- CPI reviews favour tenants when inflation is low, and landlords when inflation runs hot, which is exactly the environment much of the market is in now.
- Market reviews are the most “accurate” but also the most contested, and currently the most divergent in outcome depending on precinct and asset quality.
- Ratchet clauses structurally favour landlords by removing the downside scenario but only in standard commercial leases; they’re restricted or void in most protected retail leases.
If you’re not sure which structure is sitting in your lease, or how it compares with what’s actually happening in your precinct, it’s worth checking before your next review date arrives rather than after. LeaseInfo can help put the market context around that review, with access to comparable rents, vacancy trends and centre-level lease insights.
Rent review clauses rarely get much attention at signing, but they’re often the clause that matters most years later. It is the one that determines whether rent moves with the market over time.