Pubs with an annual RPI rent increase due last month will be stung by a sharp rise in the Retail Prices Index. RPI rose to 5.6% in September from 5.2%, official figures show. More than half of the country’s tenanted pubs have RPI increases written into their leases. Those with annual reviews due between 1 and 30 September will now see an extra rise in rental costs. Meanwhile, the Consumer Price Index increased from 4.5% to 5.2%. Comment: Paul Charity, M&C Report group editor Leases that increase rent in line with RPI and CPI are not new. But they have become increasingly prevalent in the last couple of years and around 60% of all agreements within the Enterprise Inns estate, for example, have annual rent increases in line with RPI. Leases with RPI rent increases, or CPI rent increases in the case of Punch, are now offered as an alternative to five yearly rent reviews. Ironically, in a subdued rental environment, where rents are broadly stagnant or dipping, this neatly provides considerable annual rental uplift. It was Lincolnshire brewer and retailer Batemans that first introduced RPI-indexed agreements as an alternative to rent reviews. This magazine was broadly supportive of the move at the time because Bateman's operated a fairly benign rental environment and inflation was subdued while rents were increasing. In a much more inflationary environment like now, RPI-indexed rent increases are a landlord's dream and a tenant's nightmare. The sensible route here would be to cap RPI or CPI increases like London-based Fuller's and others have done - Hall & Woodhouse caps rents at 2.8%. Charles Wells has gone further and removed RPI rent increases from the contract terms of the leased pubs it has acquired from major pubcos. Another irony is that RPI and CPI increases hit the company's best tenants hardest in quantum terms. A tenant paying a high rent in industry terms, by definition running companies' best pubs with a high level of expertise, sees the biggest annual increases in cash terms - you could argue it's another form of penalising success.