Landlord guide · Rent escalations and CPI
When the rent goes up, and what the lease says it goes up by.
Rent goes up on a date the lease either prints or defines by a rule, usually each anniversary of a start date. Find that clause and write down each step date, then note how each step is set: a fixed amount, a fixed percentage, or a change in an index such as the consumer price index. Only a fixed step has a new rent you can state in advance. An index step has a date and a rule now, and an amount once the index figures exist. Prism returns each step’s date with the clause behind it. It does not look up an index or work out the new rent, so the amounts below are arithmetic you do from the clause.
Worked example: a fixed step and a CPI step
Two leases with the same base rent, $4,000.00 a month. Lease A steps up by a fixed percentage from the day rent starts. Lease B adjusts by a price index, with a floor and a cap. The index figures for Lease B are made up to show the arithmetic; they are not real index values.
Lease A: the dates“The Commencement Date is February 1, 2026. The Rent Commencement Date is the date three (3) months after the Commencement Date, and Base Rent is abated until then. Base Rent is Four Thousand Dollars per month.”
Lease A: the increases“On each anniversary of the Rent Commencement Date, Base Rent increases by three percent (3%) of the Base Rent in effect immediately before that anniversary.”
Lease B: the adjustment“The Commencement Date is August 15, 2026. On each anniversary of the Commencement Date, Base Rent shall be adjusted by the percentage change in the Index for the month two (2) months before that anniversary compared with the Index for the same month one (1) year earlier, but by not less than two percent (2%) and not more than five percent (5%). Base Rent is Four Thousand Dollars per month.”
| Date | What happens | How it is worked out | Rent after it |
|---|---|---|---|
| May 1, 2026 | Lease A: rent starts | Three months after the Feb 1, 2026 commencement | $4,000.00 |
| May 1, 2027 | Lease A: first 3% step | First anniversary of May 1, 2026 | $4,120.00 |
| May 1, 2028 | Lease A: second step | Second anniversary | $4,243.60 |
| May 1, 2029 | Lease A: third step | Third anniversary | $4,370.91 |
| Aug 15, 2027 | Lease B: first CPI adjustment | First anniversary of the Aug 15, 2026 commencement. The index months compared are June 2027 and June 2026 | $4,088.00 |
| Aug 15, 2028 | Lease B: second CPI adjustment | Second anniversary. The index months compared are June 2028 and June 2027 | $4,169.76 |
- Lease A counts from the Rent Commencement Date, May 1, 2026, not from the Commencement Date. Counting from Feb 1, 2026 would put the first step on Feb 1, 2027, three months early.
- Lease A: each step is 3% of the rent in effect, so it compounds. $4,000.00 becomes $4,120.00, then $4,243.60, then 4,370.908, which is $4,370.91 to the cent.
- Lease B, first adjustment: with made-up index figures of 300.0 for June 2026 and 306.6 for June 2027, the index rose 2.2%. That is between the 2% floor and the 5% cap, so the rent becomes $4,000.00 x 1.022 = $4,088.00.
- Lease B, second adjustment: 309.0 for June 2028 against 306.6 for June 2027 is a rise of less than 1%. That is under the floor, so 2% applies: $4,088.00 x 1.02 = $4,169.76.
Prism returns the date each step takes effect, or the annual pattern and the next date it falls on, with the clause. The new rents are the reader's arithmetic, as shown.
The lease and its clauses were written for this page, not taken from a customer’s lease. The dates are worked out by hand and checked against the same date arithmetic Prism uses.
What to read in an escalation clause
Each step date
Every scheduled increase, or the pattern (each anniversary) and the next date it falls on. A fixed annual pattern is rolled forward, so the list shows the next step rather than the first one ever.
The date the steps count from
The commencement date and the rent commencement date are different dates when rent is abated. The clause says which one the steps follow.
How each step is set
A fixed amount, a percentage, or an index. For a percentage, whether it applies to the rent in effect or to the original rent.
Index adjustments
The index named, the adjustment date, the months compared and any floor or cap. The clause is quoted, so all of it is there to read; the index figures are not in the lease.
Renewal-term rent
How rent is set for a renewal term (a fixed rent, a stated schedule or fair market value) is its own term, apart from the initial term’s steps.
Ground-rent resets
In a ground lease, each periodic reset of the rent to an appraised value is its own dated row, with how the new rent is fixed.
What is not base rent
Increases in operating expenses, taxes and insurance, and their caps, are separate terms from the steps in base rent.
What it will not do
Prism returns what the lease states and quotes where. It does not look up an index, does not work out a new rent, does not value a fair market rent, and does not fill in a step the lease leaves out. It does not move a date for a weekend or a holiday. It is not legal advice, and reminders are best-effort.
Use it from an AI agent
Prism is a remote MCP server. In Claude Code:
claude mcp add --transport http prism https://prism.parad1gm.com/api/prism-mcpThen ask: “Read this lease and list every rent increase date, with how each increase is set and the clause each one comes from.” The agent sends the document with prism_review_contract and reads the result with prism_get_contract. Setup for Claude on the web, Cursor, VS Code and A2A agents is on the agents page.
$0.50 a contract for an agent, and the first 3 are free. On the website it is $1 per contract, or $9 a month for up to 50.
Questions
Does Prism work out the new rent?
No. It returns the date each step takes effect and the clause that sets it. It does not look up an index, calculate a new rent or value a fair market rent, and a step the lease leaves out is left out. The amounts in the example are arithmetic you do from the clause.
Which date do the increases count from?
Whichever the lease names. When rent is abated at the start, the commencement date and the rent commencement date differ, and a lease that steps up on each anniversary of the rent commencement date does not step up on the lease’s own anniversary. In Lease A the difference is three months.
Does the percentage compound?
Whichever the clause says. Lease A applies 3% to the rent in effect, so it compounds: $4,120.00, then $4,243.60. Had it said 3% of the initial Base Rent, each step would add the same $120.00 and the rents would be $4,120.00, $4,240.00 and $4,360.00.
Where do the index numbers come from?
Not from the lease. The lease names the index and the months to compare, and the figures come from whoever publishes the index. Prism quotes the clause with its floor and cap; it does not fetch the figures.
What about a rent step that has already passed?
On the review screen a past rent step shows as having taken effect, not as a missed deadline: nobody has to act on the day, the rent simply changes.
Will Prism remind me before the rent goes up?
For a paid lease, yes: an email 90, 30 and 7 days before each dated deadline, and a dated rent step is one of them.
Do local rent limits change this?
Some places limit how much or how often rent can rise, whatever the lease says. That is outside this guide and outside what Prism reads.
Is this legal advice?
No. It tells you what the lease says and where. For a rent increase you are about to give, read the clause and ask a lawyer.
More for landlords
Every guide here starts from the lease. Prism for landlords shows the whole picture: leases, insurance certificates and loan documents read once and put on one calendar that emails you before each date.
- How to track lease expirations across your rental units
- How to track your tenants’ insurance certificates
- What the lease says about the security deposit, and the dates
- The tenant’s option to renew: the dates a landlord should watch
- A spreadsheet or Prism for lease expiries
This guide is about what a lease says and which dates follow from it. It is not legal advice, and it does not cover state or local law. How often Prism finds these dates is on the accuracy page.