The RPI Ground Rent Calculator relies on a straightforward formula to calculate the new ground rent. It considers the change in the Retail Price Index (RPI) and the original ground rent (OGR). By using these inputs, the calculator efficiently produces the new ground rent that reflects economic changes.
Formula:
The formula used by the calculator is as follows:
NGR = (RPI/100 * OGR) + OGR
Here:
- NGR represents the RPI New Ground Rent ($)
- RPI signifies the change in Retail Price Index (%)
- OGR denotes the original ground rent ($)
This formula operates by multiplying the RPI change by the original ground rent and then adding the original ground rent to the outcome. This gives an updated ground rent, which accommodates the effect of inflation on property value.
Example
Let’s illustrate this with an example. Suppose the change in RPI is 10%, and the original ground rent is $1000.
Plugging these values into our formula, we get:
NGR = (10/100 * 1000) + 1000 = $1100
Thus, the new ground rent adjusted for the RPI change would be $1100.