Step Rent

Step rent refers to a lease structure in which the rental rate changes at predetermined intervals, typically increasing over time. Step rent is commonly used in long-term leases, ranging from 5 to 15 years, to account for inflation and potential market growth during the lease term. Step-up rent is a type of step rent where the rent increases at specific dates or periods, while step-down rent refers to a lease structure that provides for specified rent decreases at certain future dates, which may correspond to a rent-free period or other incentives.

Step rent provisions help landlords manage the risks associated with long-term leases, ensuring that rental income keeps pace with market conditions and inflation. At the same time, they provide tenants with predictable rent increases and an opportunity to plan their financial obligations accordingly.