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Property Services

Rent Reviews and Negotiations

What is a Rent Review?

Rent reviews have become a fundamental aspect of nearly every modern lease.

Commercial leases typically provide for the rent to be increased periodically to allow for inflation. This allows landlords to grant leases for the length that many tenants require without having to restrict rent to the initial sum agreed.

Reviews are normally to 'market value' and 'upwards only' every three, four or five years. There are other forms of review based upon business turnover and pedestrian footfall.

How is the Revised Rent Assessed?

The interval between rent reviews as well as the content of other lease's clauses, are important elements in the assessment of the rent. Their impact on the final outcome will reflect the negotiating position and skill of the parties involved - the advice of a professional can radically affect the final outcome.

Most reviews are to 'market rent' although the lease often defines hypothetical circumstances including vacant possession, good repair, full lease term etc.

A property is compared with others which are similar and have been let on the open market recently.

In practice, no two properties are identical.

Adjustments have to be made for location, size, layout of accommodation, condition, use, rent review pattern, tenants' improvements and many other variables.

Rent review negotiation is a complex process, requiring an exhaustive understanding of the lease contract - in particular the provision for rent review to include the relevant lease assumptions and timetable for the rent review operation.

It is also especially important to determine whether "time is of the essence", as the consequences of missing a specific lease date can be financially catastrophic.

The negotiation procedure should be conducted properly, and the end result should be fair and equitable from the point of view of both parties. The process can be quite complex, and time limits are often imposed by the lease.

We provide professional advice in respect of commercial rent reviews, conducting negotiations with either the landlord or tenant's appointed surveyor.

In these difficult economic times it can be tempting to try to reduce costs by dealing with rent review negotiations yourself, but this is often false economy.

Having a professional on your side with knowledge of local rents, the review process and, if necessary, arbitration, will save you time, stress and ultimately money in the long run.

When rent reviews fall due and landlord and tenant are unable to agree the new rent between them, then most leases will include dispute resolution arrangements. These typically involve the appointment of an independent expert or arbitrator who is authorised to settle the matter.

To find out more on how Harrogate PPC could help, please call our office on 0330 333 0701 or email. We would be delighted to meet with you and have a chat on how we could be of help.

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