Turnover rent: what it is and how to calculate it
Turnover rent ties part of the rent to what the tenant sells. This guide explains the common structures, the calculation with a worked example, and what it takes to run it every month without spreadsheets.
8 October 2026 · VemLease team, Vemco Group
Turnover rent is rent that depends on the tenant’s sales. The tenant pays an agreed percentage of the turnover made in the unit, usually on top of a base rent and sometimes instead of it. In the United States the same arrangement is called percentage rent, and a lease built on it is a percentage lease. It is most common in shopping centres, outlets, retail parks, airports and stations.
Why landlords and tenants use it
A fixed rent puts the trading risk on the tenant. Turnover rent shares it. When the unit trades well the landlord earns more, and when it trades badly the tenant pays less. That gives the landlord a reason to invest in footfall, tenant mix and marketing, and it gives the tenant room in a weak season.
The price is administration. Someone has to collect sales figures from every tenant, check them, apply the rule in each lease and invoice the result. Most of this guide is about that work.
The three common structures
1. Base rent plus a share of turnover
The tenant pays a base rent, and turnover rent on top once sales pass a threshold. This is the structure most turnover leases use.
2. Pure turnover rent
All of the rent is a percentage of turnover, often with a minimum and a maximum so that both sides know the limits.
3. Stepped percentages
The percentage changes with the level of sales: one rate up to a first level of sales and another rate above it. A lease can also cap the turnover rent for a year.
How to calculate turnover rent
For a base rent with turnover rent on top, the calculation has two steps.
Breakpoint = base rent ÷ percentage
Turnover rent = (turnover − breakpoint) × percentage, when turnover is above the breakpoint
The breakpoint is the level of sales at which turnover rent starts. Worked out from the base rent in this way, it is called the natural breakpoint. A lease can also set a different threshold by negotiation, often called an artificial breakpoint.
A worked example
The figures are an example, not market data. A fashion tenant pays a base rent of 120,000 a year and a turnover percentage of 8%.
- Natural breakpoint: 120,000 ÷ 8% = 1,500,000 in annual sales.
- Sales of 1,800,000: turnover rent is (1,800,000 − 1,500,000) × 8% = 24,000. Total rent is 144,000, which is 8% of sales.
- Sales of 1,300,000: sales are below the breakpoint, so there is no turnover rent. The tenant pays the base rent of 120,000.
| Annual sales | Base rent | Turnover rent | Total rent |
|---|---|---|---|
| 1,300,000 | 120,000 | 0 | 120,000 |
| 1,500,000 | 120,000 | 0 | 120,000 |
| 1,800,000 | 120,000 | 24,000 | 144,000 |
| 2,200,000 | 120,000 | 56,000 | 176,000 |
What counts as turnover
The lease defines turnover, and the definition decides the rent. These are the points a lease usually settles:
- Sales tax or VAT, which is normally left out.
- Refunds and returns.
- Online orders that are collected or returned in the unit.
- Staff discounts, gift cards and concessions inside the unit.
- How and when the tenant reports sales, and the landlord’s right to check them.
This guide explains the mechanics. The wording of a lease is a matter for your legal adviser.
Where turnover rent goes wrong in practice
- Sales arrive late or not at all. Each missing report holds up an invoice, and someone has to chase the tenant.
- Figures live in emails and spreadsheets. No single place shows who has reported and who has not.
- Every lease has its own rule. Percentages, ranges, limits and caps differ from tenant to tenant, and calculating them by hand invites mistakes.
- Billing periods differ. Some leases bill turnover rent monthly, others quarterly or yearly.
How VemLease handles turnover rent
In VemLease the turnover rent rule sits on the lease: a percentage of tenant sales, with ranges, limits and annual caps where the lease has them. Turnover rent is billed monthly, quarterly or yearly.
The sales come from VemTenant, Vemco Group’s platform for tenant sales. Tenants report their sales there, tenants who have not reported get an automatic reminder by email, and the reported sales flow into VemLease. The revenue reporting status of each tenant is in view, and footfall from Vemcount sits next to the sales.
See how it fits a centre on the page for shopping centres, or read about tenant billing and invoicing.
Questions about turnover rent
Is turnover rent the same as percentage rent?
Yes. Turnover rent is the term used in the United Kingdom and much of Europe, and percentage rent is the term used in the United States. Both mean rent calculated as a percentage of the tenant’s sales.
What is a natural breakpoint?
The level of sales at which turnover rent starts, when it is worked out from the base rent: base rent divided by the percentage. With a base rent of 120,000 and a percentage of 8%, the natural breakpoint is 1,500,000.
What percentage is normal?
There is no single figure. It depends on the tenant’s trade and margin: trades with low margins, such as grocery, pay a lower percentage than trades with higher margins. The lease sets it.
How often is turnover rent billed?
The lease decides. Monthly, quarterly and yearly billing are all in use, and VemLease bills turnover rent in each of these ways.
How do landlords get the sales figures?
From the tenant, as the lease requires. In VemLease the figures come from VemTenant, where tenants report their sales and get an automatic reminder by email if they have not reported.
See turnover rent run on your own leases
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