Which type of lease involves rent increases on a predetermined schedule?

A Step-up or Graduated Lease involves rent increases that occur on a predetermined schedule, making it a structured agreement between the landlord and tenant. In this type of lease, the rental payments are set to rise at specific intervals, such as annually or biannually, and these increments are agreed upon in advance.

This lease structure provides predictability for both parties. The landlord can anticipate increased revenue over time, while the tenant knows the schedule of their rental obligations, allowing them to plan their finances accordingly. This predictability in financial planning is particularly advantageous in long-term leases where tenants might expect to remain in the property for several years.

On the other hand, a Straight Lease would maintain the same rent throughout the lease term, an Indexed Lease typically ties the rent increase to a specific index such as the Consumer Price Index, and a Percentage Lease usually varies the rent based on the tenant's sales performance. Therefore, the uniqueness of the step-up or graduated lease is its predetermined schedule for rent increases, distinguishing it clearly from these other types of leasing agreements.