CPI indexation sounds dry. It is, a little. But for accountants and property owners, it is one of those small processes that can involve significant sums if handled incorrectly.
Why CPI indexation matters
Most commercial leases include provisions for rent indexation. Correct adjustments ensure the rent follows the agreement and the billing data is updated at the right time.
The wrong index month, an incorrect base amount or late notification can create discrepancies that have to be resolved later. Clearing things up afterwards is rarely the most popular task in property management.
What should be checked?
- Which index and reference month the lease specifies.
- When the adjustment takes effect.
- Whether there are floors, caps or special limits.
- Whether the billing data has been updated after the calculation.
- Whether notices and documentation have been stored correctly.
Accounting and property need to be connected
CPI indexation takes place in the lease, but its consequences land in the accounts. Lease data, invoicing and reporting should therefore be connected. Otherwise, the accountant is left with a pile of questions that should have been resolved earlier.
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