Every commercial property lease will be subject to a rent review at regular agreed intervals, usually every three to five years.
The reason for a rent review is to allow the landlord to value the premises and review how much they charge for it, usually with a view to increasing the rent.
Basically, rent reviews are carried out so the figure the tenant is charged can be adjusted in line with current market conditions and the state of the property.
Most commercial property leases contain an ‘upwards only’ rent review clause, meaning the rent can only increase or stay the same – even if market prices are falling.
In most cases, a commercial lease will contain a clause outlining when a rent review will take place. This has to be agreed upon by both parties involved.
Due to leases becoming shorter, the intervals between rent reviews are now more frequent.
Typically, a rent review is conducted every three to five years, which is the most common amount of time.
Rent review negotiations usually take into account the following factors:
In our experience, the best way to conduct a successful rent review is for the landlord and tenant to appoint their own Chartered Surveyors to act on their behalf.
If the landlord and tenant cannot agree on a suitable new rental figure during the review process, the existing lease will usually stipulate what the dispute resolution process which should be followed.
If you’re caught up in a dispute, it’s likely an arbitrator or independent expert will be appointed. In most instances, this is a third-party surveyor who must try to negotiate a new rental figure which both parties agree to.
At Imperium Chartered Surveyors, we can provide professional submissions and representation to deal with issues like this should they arise.
When providing this advice, we take into context the terms of the lease and use our extensive knowledge of the commercial property market across the South East.
If you are already in a commercial property and need a current rental valuation, we can provide this and negotiate any rent reviews on your behalf.
For the most serious disputes where it is impossible to agree on a new rental rate, the worst-case scenario would require a court to deliver a judgement.
In our experience, this should be avoided at all costs as it is usually a very lengthy and expensive process.
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