Answers · Rent ratchet clause
What is a rent ratchet clause?
Direct answer
A rent ratchet clause prevents the rent from falling at a market rent review — the rent can only stay the same or increase, never decrease, even if market rents have dropped. It protects the landlord's income at the tenant's expense.
Ratchet clauses matter most when the market softens. Without one, a genuine market review could lower your rent if comparable rents have fallen; with a ratchet, you're locked at the existing level (or higher) regardless. Some jurisdictions and retail-lease regimes restrict ratchets, but in commercial and industrial leases they're common and worth checking for.
It's one of the small print items that separates a fair landlord from an opportunistic one. A landlord committed to fair, transparent reviews won't lean on ratchet mechanics to extract above-market rent. When you're weighing a lease, the review clauses — ratchets included — tell you a lot about how the relationship will actually feel over time.
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