The rental therefore becomes a net rental income to the owner, payable periodically (usually monthly) in advance for the duration of the lease.

One such very standard lease in New Zealand is the Auckland District Law Society (ADLS) lease form, however standard forms of such lease contracts exist in most countries.

The level of net rental (and hence its impact on property value) is ultimately determined by the supply of similar space available in that location, and demand for such space from potential tenant occupiers.

When property investors stress the importance of 'location' in property investment buying, they are not referring to the aesthetics of the location, or its sea views per se, but rather to the fact that the best location commands the greatest tenant demand, and the greatest tenant demand commands the highest rents.

Learn this one simple, straight forward, failsafe principle of property investment word by word, and property will serve its owner well.

The level of rental income is normally reviewed and reset, subject to the lease provisions, every two years.

It follows that where a property is located in an area of growing demand, the rental level will increase at the rental review time in response to a greater number of tenants seeking to occupy the space that is available in that location.

The existing tenant may object to the new market level and a negotiation to determine a new market rental will be carried out. The tenant does not, however, have an option to leave at this point and only the rental level is reviewed.

In summary, there is a need to carefully analyse the tenant demand trends in the area. Properties in well analysed and selected locations benefit from increasing tenant demand which in turn leads to the potential for rental growth.