Graduated Lease
Candlefocus EditorA graduated lease is an agreement between a landlord and tenant, or a lessor and a lessee, that sets out a periodic adjustment of monthly payments in line with increasing rental values. It is a more advanced form of agreement compared to basic rental leases, and often entails a higher rent payments over time as property values appreciate.
Essentially, a graduated lease, or graduated rent payments, is a way of committing to a consistent ongoing rent payment even when rental for the same property increase in time due to market conditions or other factors. This form of agreement is often attractive for those in the real estate business, as it can provide an opportunity to benefit from the appreciation of the property value over time, while ensuring the tenant remains within their budget.
Another benefit of graduated lease agreements is the virtual certainty of a predictable gradual increase in the monthly rent payments. This allows landlords to adjust their own budgeting requirements, while making sure the tenants are not left out of pocket. In many cases, this form of lease also provides better protection to the tenant than traditional rent agreements, as the monthly increase is fixed and predetermined.
Ultimately, a graduated lease offers a degree of future planning that traditional rental agreements may not provide. This is especially true for tenants or lessors who may be looking to take advantage of an appreciation of the property's value. It can also give landlord an added layer of protection in terms of rental payments, by allowing them to lock in rental income from tenants who agree to gradually increasing rent. As with any rental agreement, the terms and conditions should be read and understood before signing.