Escalation clause

Example

A 3-year lease starts at $1,500 a month on January 1, 2027, with a 3% escalation each year. Rent becomes $1,545 a month in 2028 and $1,591.35 in 2029, for a total of $55,636.20 over the three years. A clause tied to the Consumer Price Index would move with inflation instead, often with a floor and a ceiling, and a fixed-dollar clause might add $50 a month each year. Check whether the escalation also applies at renewal, or only within the term.

In a lease it looks like…

On each anniversary of the commencement date, the monthly rent shall increase by three percent (3%) over the rent in effect for the preceding lease year.

By state

Where rent control applies, an escalation clause cannot push rent past the local cap, and some states require written notice before any increase takes effect, even one the lease already sets out.

Rent increase notice by state