Commercial property rent reviews and rent negotiations can be a stressful time for any organisation particularly in a market where rents have been unstable. Understanding your rights and the market is vital to getting the best from your property and the lease.
Lease consultants have a detailed understanding of the rent review procedure and the commercial property market and can help you and your business understand your rights and guide you through the rental negotiations to the completion of a rent review memorandum.
Our rent review and lease advisory service combines our thorough understanding of the commercial market place with an analytical approach to the evidence in relation to office, retail or industrial buildings, specification, location and lease terms; relying upon case law precedent to win key technical points.
A rent review is naturally a good time to establish a dialogue between landlord and tenant on any mutually advantageous existing lease terms, including inserting/deleting break options or extending the lease term.
Negotiated settlements are desirable, but not at any cost. Our robust approach to rent review negotiations is backed by our ability to act effectively as expert witness in third party proceedings whether at arbitration or independent expert.
How much time do I need to prepare for a rent review?
Rent reviews typically occur every five years depending on the length of the lease. Don’t leave it to the last minute to consider your rent review strategy. There may be time limits stipulated in the lease’s rent review clause within which the landlord or tenant might have to issue or respond to a rent review notice. Eighteen months before the rent review date should give sufficient time to start checking the lease to ensure it doesn’t specify a time limit and to appoint a rent review surveyor. Missing deadlines can be costly: tenants could have to pay an inflated rent and landlords may lose the right to a rent review entirely.
Does the tenant pay rent while the level of rent is being disputed?
Yes. The tenant must pay rent at the old rate whilst the rent review is being negotiated. Once an agreement is reached the difference (back rent) will have to be paid. If the rent increases, interest often has to be paid on the overdue amount.
What is “Open Market Rent”?
Open Market Rent is the best rent a property might achieve if let on the open market, given a willing landlord and tenant and taking into account the terms of the lease and the state of the local commercial property market.
Why should we appoint a lease consultant for the rent review process?
Rent reviews can be technical and complex and in the current market it is more important than ever to ensure the full potential of the property is realised. Appointing a surveyor is the most effective way of accessing the open market, taking into account local comparables and negotiating allowances on specific points and assumptions. Surveyor’s fees are inexpensive in comparison to overpaying or under claiming rent or for letting the case reach arbitration.
Baynard House, Queen Victoria Street, London EC4
This is a 1970s telecommunications centre of nearly 340,000 sq ft to be valued as a warehouse within Use Class B8. Acting on behalf of BT plc, Allsop was instructed to respond to the landlord’s rent review notice proposing to increase the rent by 40%.
Rent reviews require a deep understanding of the market with an analytical approach to the evidence, specification, location and lease terms. This case was no exception as the rent review clause was poorly drafted and it was necessary to liaise with the client’s lawyers to ascertain the correct position. It is vital to understand your negotiating position at the outset in order that the right strategy and tactics are employed.
By carrying out detailed and lengthy research into the evidence and supported by the legal advice, a strong rebuttal could be put to the landlord. By preparing our case fully before entering negotiations, we were able to secure a nil increase for BT. This saved in excess of £1.6m over the period to the next rent review.