Hi,
I have situation whereby, after year 2 of the lease there is a review of rent for uplift depending on CPIH. This will happen each year up until the break clause date at the end of year 5 (assumed that we will break at this date).
Within the lease agreement, it stipulates that there is a minimum uplift to the base rent of 'current rent multiplied by 1.02' and and a 'maximum of current rent multiplied by 1.04'. Appreciate that this falls within variable lease payments and such would be modified once the figure is known in year 3 and each subsequent year. However, should the initial lease liability calculation factor in the the minimum uplift each year of 2% and then adjusted if different?
IFRS16 rent review for interest
-
- Posts: 6
- Joined: 12 Mar 2024, 15:48
Re: IFRS16 rent review for interest
Thanks, yes I have seen this. Just to be clear, my point is that because there will be a minimum increase of 2%, should this not be factored in from the start? Or is it that because we don't know what the figure may be, we have to then modify each year.
Re: IFRS16 rent review for interest
Yes, you should factor in the minimum step-up at the start of the lease