25 Nov 2020

As part of the Government’s Spending Review they have published a Response to the Consultation on the Reform to Retail Prices Index (RPI) Methodology. AREF responded to this consultation and in section 100 of the Government’s response they do acknowledge the commonplace use of the RPI in long-lease real estate and ground rent contracts and that reform will likely reduce the size of future payments dictated by the terms of these contracts.

The headlines from the response are as follows:

  • The Chancellor will not consent to any reform before 2030, the point at which the last reference gilt will mature. He appears to have been persuaded by the wider points made on the adverse impacts of early reform.
  • Thereafter, the Chancellor no longer has any legal role in the process, and UKSA have confirmed, that subject to notification with the Bank of England, they can go ahead with reform from 2030. UKSA has stated its intention to do this. 
  • So the position is reform in February 2030 (the precise date at which the methods and data sources of CPIH will be brought into the RPI). This gives our industry, and our clients, just over 9 years to prepare for the impact as well as clarity over when the reform will happen.
  • On the issue of compensation once the change happens, the decision is, unsurprisingly, that there will be no compensation.



Jacqui Bungay

Jacqui Bungay

AREF Policy Secretariat , AREF

Jacqui provides policy guidance and secretariat services to the AREF Board and AREF Management Committee as well as the following AREF Committees: Corporate Governance, ESG & Impact Investing, Investor, Public Affairs, Research and Information and Retails Funds. In addition, Jacqui monitors members’ compliance with AREF’s Code of Practice. 

Jacqui joined AREF in 2014 after working for over 25 years in fund compliance, client relationships and administration at Natwest Trustee & Depositary Services.