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How does the retail prices index affect park owners?

Posted on 07th July 2022 in Parks

Posted by

Paul Kelly

Partner and Solicitor
How does the retail prices index affect park owners?

On residential parks in England, there is a presumption that homeowners’ pitch fees will adjust by the change in the Retail Prices Index (RPI) between review dates. In Wales, the adjustment is by reference to the Consumer Price Index (CPI). Many holiday parks in both countries include RPI as one factor in their reviews.

RPI and CPI are just two of the inflation indexes published by the UK Statistics Authority (UKSA). Others include the Consumer Prices Index plus housing costs (CPIH). CPI and CPIH have averaged lower increases than RPI.


How are the inflation indexes changing?

The government has decided that the UKSA will be allowed to make changes to the way that RPI is calculated from 2030. This decision is subject to a legal challenge by the trustees of some final salary pension schemes, who are concerned at the potential impact of a change for their schemes.

Subject to the legal challenge, the UKSA has not yet said what it plans to do. Options include changing the way RPI is calculated or nominating an alternative index to replace it. One possibility discussed by commentators is that RPI will be brought into line with CPIH.

Whilst perhaps less likely, the UKSA might also decide to stop publishing RPI altogether. Legislation would then be necessary for residential parks in England. Current industry standard licence agreements for holiday parks in England and Wales allow another index to be used.


How would an inflation index change affect pitch fees?

The inflation factor in a pitch fee review would be calculated in a different way and may be lower. However, both on residential and on holiday parks other factors may be taken into account. We expect to issue further guidance as any change approaches.


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