One of the features that sets a Specialist Supported Housing (SSH) lease apart from a standard buy-to-let tenancy is how the rent is reviewed each year. Rather than being renegotiated at the landlord's discretion, SSH leases are typically structured with an annual, upward-only rent review linked to the Consumer Price Index (CPI), plus a fixed uplift, commonly 1%.
What is CPI, and why add 1%?
CPI measures the average change in prices of a fixed basket of goods and services across the UK economy. Using it as the basis for a rent review means your rental income is designed to move broadly in line with the cost of living, rather than being fixed for the life of the lease.
The additional 1% is built into many SSH leases as a further protection for the investor, an uplift on top of inflation, rather than income that simply keeps pace with it.
What this looks like in practice
Take a property purchased for £150,000 at a 12% NET yield. Year 1 rent would be £18,000. If CPI averages 3.5% over the life of a 25-year lease, the annual escalation modelled is 4.5% (CPI plus the fixed 1%), compounding each year. By Year 25, that same lease would be generating close to £51,768 annually, with cumulative rent across the full term in the region of £802,000.
You can run these numbers against your own purchase price and yield assumption using our Returns Calculator.
What it doesn't mean
CPI is not fixed. It varies year to year, and a period of low or negative inflation would reduce the size of the annual uplift. The 3.5% figure used across our calculator and worked examples is an assumption based on longer-term averages, not a guarantee, and actual performance will depend on how CPI moves over the specific 25 years of your lease.
Get in touch if you'd like to talk through how a CPI+1% structure applies to a specific development.