Turnover Rent

How the calculation actually works

The common structure is a base rent set below open market level — often 70 to 80 per cent of it — plus a top-up equal to an agreed percentage of gross turnover above a threshold. Pure turnover leases with no base rent exist but are rarer, and landlords with debt secured on the income resist them.

The percentage depends on the sector's margins. Comparison retail typically sits in single figures of sales; food and beverage rates are usually higher relative to floor area but applied to a different sales base. The right test is never the percentage in isolation — it is the total occupancy cost as a proportion of realistic site turnover.

Definitions decide the rent

The definition of turnover in the lease does more work than the percentage. Argue it line by line.

• VAT, staff discounts, refunds and gift card redemptions excluded
• Online sales: click and collect, ship-from-store and returns processed in store are the live battleground
• Third-party delivery platform sales, and whether gross or net of commission
• Concessions, franchise income and inter-company transfers treated on a stated basis
• Certification mechanics, audit rights and confidentiality of the sales data you disclose

What it means at review and renewal

Turnover leases still usually contain a base rent review, so the downside protection can quietly erode while the turnover top-up stays. At a 1954 Act renewal the court must set the terms of the new tenancy, and importing or removing a turnover mechanism is a matter of evidence and negotiation, not an automatic carry-over.

Turnover deals also distort comparable evidence. A headline rent that includes a turnover top-up from an exceptional trading year is not a reliable comparable for a conventional review, and should be devalued back before it is used against you.