An RPI clause is not a forecast. The lease liability holds today's rent until the review takes effect.

Most property leases carry a rent review: to RPI or CPI, or to the open market, every three or five years. Finance teams building their first lease liability ask what to assume for those reviews.

Nothing. FRS 102 is unusually direct on the point.

A rent that depends on an index or a rate goes into the liability at the level in force on the commencement date (paragraph 20.51(b)). The standard puts rent that varies with market rents in the same family (paragraph 20.53). And the measurement "shall not reflect, and shall not contain any assumptions about, changes to the index or rate after the commencement date" (paragraph 20.54).

So a fifteen-year lease at £100,000 a year with an RPI review every five years is measured as £100,000 a year for fifteen years. Not £100,000 rising at 3%. Not the budget figure. Not the landlord's expectation.

Three consequences follow.

1. The liability moves when the rent moves, and not before. It is remeasured "only when there is a change in the cash flows", that is, when the adjustment to the rent takes effect (paragraph 20.68(b)). A newly published RPI figure changes nothing until the lease turns it into a new rent.
2. The discount rate stays where it was. The remaining payments are restated at the new rent and discounted at the unchanged rate (paragraph 20.69). The one exception is rent tied to a floating interest rate.
3. The difference adjusts the right-of-use asset (paragraph 20.65) and is depreciated over what is left of the term. It does not arrive in profit or loss in one go.

A fixed uplift is a different thing. "3% on each anniversary" is known on day one, so every step is a fixed payment and belongs in the liability from the start (paragraph 20.51(a)). The two clauses can sit a line apart in the same lease, and a model that treats them alike is wrong on one of them.

In a first year-end file the errors run in opposite directions. A spreadsheet that inflates an index-linked rent overstates the liability and the asset from day one. One that leaves out a fixed uplift understates both. Each is found by reading the rent review clause against the schedule.

Lease102 reads the clause on import. A fixed uplift is worked out for each review date and shown beside the clause it came from. An index-linked or open-market review is noted with its first review date, and no future rent is computed for it. When the new rent takes effect it is recorded as an index adjustment: the remaining payments restated, the original rate kept, and the difference taken to the right-of-use asset.