Retail Lease Rent Reviews Explained: Market Review vs CPI vs Fixed Increases

When you sign a retail shop lease, the headline rent is only half the story. The clause that decides what you will pay in year two, year three and beyond is the retail lease rent review, and it is one of the most overlooked parts of any commercial tenancy. Get it right and you can budget with confidence. Get it wrong and you can be locked into increases that outpace your turnover.

Most Queensland retail leases use one of three review methods: a fixed increase, a CPI adjustment, or a market rent review. Each behaves very differently, and each carries its own risks and protections under Queensland law. This guide explains how the three compare, what the Retail Shop Leases Act 1994 (Qld) does to protect tenants, and what to check before you sign.

What Is a Retail Lease Rent Review?

A retail lease rent review is the mechanism in your lease that adjusts the base rent at set points during the term. In Queensland, retail shop leases are governed by the Retail Shop Leases Act 1994 (Qld), which sets a safety net of minimum standards designed to keep the landlord and tenant relationship fair.

One of the most important standards is the single-basis rule. Each review can use only one method. A landlord cannot combine methods on the same review date, for example taking whichever of CPI or a fixed percentage is higher. The method can change from one review to the next, so a lease might apply CPI in one year and a market review at the start of an option term, but only one basis applies on any given review. Reviews usually happen once a year, with a market review often built in when a renewal option is exercised.

Fixed (or Fixed Percentage) Increases

A fixed increase raises the rent by a set amount or a set percentage written into the lease, commonly around 3 to 4 per cent, on each review date. It is the most predictable of the three methods.

The appeal is certainty. Both sides can see the exact rent years in advance, which makes budgeting straightforward. The trade-off for tenants is that a fixed increase applies regardless of how your business is trading or what the wider market is doing. On a long lease, a percentage that compounds every year can drift well above the real market rent. For landlords, the risk runs the other way: a fixed rate can fall behind a fast-rising market.

CPI Rent Reviews

A CPI review adjusts the rent by the movement in the Consumer Price Index (CPI), the Australian Bureau of Statistics measure of inflation. The idea is that your rent keeps pace with the cost of living rather than an arbitrary fixed figure.

Wording matters more here than tenants often realise. A good clause names the exact index, such as the All Groups CPI for Brisbane, and the two periods being compared. If the lease is vague, the parties can end up arguing over the correct calculation. CPI reviews usually produce moderate movements, but in a high-inflation stretch they can climb sharply. Watch for "upwards-only" CPI wording as well, because a clause drafted to stop the rent ever falling can raise questions about whether it is valid under the Act. If a CPI clause is not clear, ask for the calculation in writing before you accept the new figure.

Market Rent Reviews

A market rent review resets the rent to the current market rent for comparable premises. It typically applies when a renewal option is exercised, or at set points in a longer lease. If the landlord and tenant cannot agree on the figure, an independent specialist retail valuer determines it.

This is where the strongest tenant protection sits. Because ratchet clauses are void in retail shop leases, a market review can move the rent down as well as up. In a soft market, that can work in a tenant's favour. The trade-off is uncertainty, since neither side knows the outcome until the review is done, and market reviews are the most common source of rent disputes. If you are heading into one, it is worth getting advice on the valuation early.

Market Review vs CPI vs Fixed Increases: Side by Side

Each method suits a different priority. The table below sums up how they compare for a Queensland retail tenant.

Review method	How the rent changes	Predictability	Can rent go down?	Best suited to
Fixed / fixed percentage	Set amount or percentage each year, written into the lease	High	No	Tenants who value certainty and easy budgeting
CPI	Tracks the ABS Consumer Price Index (inflation)	Moderate	Rarely, and often worded to move up only	Those wanting rent tied to the cost of living
Market review	Reset to current market rent for comparable premises	Low	Yes, ratchet clauses are void in retail leases	Reviews at option or in longer leases

Some leases also use turnover rent, where part of the rent is a percentage of the tenant's sales. That sits outside the scope of this guide, but the same single-basis and fairness rules apply.

The Rules Every Queensland Retail Tenant Should Know

The Retail Shop Leases Act 1994 (Qld) puts firm limits on how rent reviews can be structured in a retail shop lease. The key protections are:

• No ratchet clauses: a provision that stops the rent falling on a market review is void, so on a market review the rent must be able to decrease. A limited exception applies to a "major lessee" (a tenant of five or more retail shops in Australia) that opts in.
• No dual-method reviews: a clause that lets the landlord pick the higher of two or more methods on a single review is not allowed.
• No maximum cap: the Act does not set a ceiling on how much rent can rise, so the protection comes from the method being fair and clearly defined, not from a fixed limit.
• One basis per review: each review uses a single method, though the method can differ from one review to the next.

Scope matters too. The Act generally covers retail shops, but premises with a floor area over 1,000 square metres and non-retail commercial premises fall outside it. Those leases are governed by Queensland's property law framework and ordinary freedom of contract, where ratchet clauses and dual-method reviews can be valid. If your lease ends with no option to renew, any new lease is a fresh commercial negotiation with no statutory cap on the starting rent.

What Happens If You Cannot Agree on a Market Rent Review?

Retail shop lease disputes in Queensland follow a two-step path. The first step is mediation through the Queensland Small Business Commissioner. If mediation does not resolve it, the matter can be referred to the Queensland Civil and Administrative Tribunal (QCAT).

Where the dispute is specifically about market rent, and the parties cannot agree within one month after the review date, a specialist retail valuer must determine the current market rent. If the parties cannot even agree on who the valuer should be, either party can apply to QCAT to appoint an independent one. The landlord and tenant then share the valuer's fee equally.

One practical warning: do not stop paying rent while a review is in dispute. Withholding rent can put you in breach of the lease, which can create a far bigger problem than the review itself. Keep paying, and work the issue through the proper channels or with help from our dispute resolution team.

Frequently Asked Questions

Can my rent go down at a review?

Yes, on a market rent review of a retail shop lease. Ratchet clauses that prevent the rent falling are void under the Retail Shop Leases Act 1994 (Qld), except where a major lessee has opted in. Fixed and CPI reviews, by contrast, are usually structured so the rent only holds or rises.

Is there a limit on how much my rent can increase?

No. The Act does not set a maximum increase for a retail shop lease. What it does require is that the review uses one of the permitted methods, is clearly defined, and is not a dual-method or ratchet arrangement.

What is the difference between a retail shop lease and a commercial lease?

A retail shop lease gets the safety net of the Retail Shop Leases Act, including the rent review protections above. Non-retail commercial premises, and retail shops larger than 1,000 square metres, fall under the Property Law Act instead, where the lease terms largely govern and landlord-friendly clauses are more common.

Who pays for a market rent valuation?

The landlord and the tenant share the specialist retail valuer's fee equally. Because those costs and any delay can add up, many parties try to agree on the market rent, or on a valuer, before it reaches that stage.

Can I withhold rent if I think a review is wrong?

Generally no. Withholding rent can breach your lease and weaken your position. The safer approach is to keep paying, seek legal advice, and use the mediation and tribunal process to resolve the disagreement.

Getting Your Rent Review Clause Right

The rent review clause is where a lease quietly costs you money, or protects you, for years at a time. The best moment to deal with it is before you sign, when the terms are still open to negotiation, rather than at the first review when the numbers are already locked in.

OMB Solicitors' Gold Coast commercial leasing team, part of a property practice led by a Queensland Law Society Accredited Specialist in Property Law, reviews and negotiates retail lease terms for both tenants and landlords across South-East Queensland. If you are about to sign a lease, facing a review you are unsure about, or in dispute over a market rent, get in touch for advice tailored to your situation.

This article is general information only and is not legal advice. For advice about your specific lease, please speak with a qualified solicitor.