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rics

Regulated by the RICS


 

1. Objective

To achieve the best rent for our client (be they landlord or tenant) as quickly as reasonably possible and to avoid the expense of third party determinations.

2. Basis of Rent Review

  1. An occupational lease will provide for the original rent to be fixed for a certain period.  In shorter leases (3 or 5 years) the rent will often be fixed for the whole period. In longer leases there will normally be provisions for rent review(s).  The basis of the rent review(s) will be set out in the lease contract and will be effective periodically, possibly every 3 or 5 years but in older leases a longer period may be specified.
  2. As time passes the value of the property changes - either as a result of inflation or because of market forces.  The purpose of the rent review is to reflect these changes and adjust the rent - as far as reasonably possible -  so that the rent paid remains consistent (in monetary terms) with the level agreed at the beginning of the lease.

3. Basis of New Rent

  1. The lease will provide the basis on which the revised rent shall be assessed.  The usual provisions are either a review to a Market Rent or by reference to the Retail Price Index (or some similar mechanism).
  2. Many leases provide that if the level of the new rent calculated in accordance with the review procedure is less than the existing (passing) rent - the rent payable should continue at the previous level (this is referred to as an “upward only rent review” provision).  This protects the value of the landlord’s investment, but in times of recession can be unfair to the tenant and in recent years there has been a trend towards provision of allowing “upwards or downwards” rent reviews.

4. Procedure

  1. The lease will specify the effective date for the rent review and the provisions by which it may be activated.  This is usually by notification (possibly a formal notice) given by one party (usually the landlord) to the other.  However the provisions under which the landlord’s notice may be served and the actions to be taken following receipt of the notice can be onerous in some cases, particularly in older leases.
  2. Unless the lease provides otherwise the revised rent will be valued/assessed on the basis of the circumstances and rental levels/index figures at the date specified for the rent review in the lease.
  3. If the rent review is not activated at the effective date, it can usually be activated at any time up to the following rent review date (unless the lease provides otherwise).  Payment of the new rent will be backdated to the effective rent review date specified in the lease but the rent must be assessed with reference to circumstances/values at that date.

5. Dispute Procedures

  1. If the parties to the lease cannot agree the level of the new rent - there will be a mechanism in the lease for it to be determined by a third party - usually by a surveyor acting either as an arbitrator or an independent expert.  In either case it is usual for the third party to allow both landlord and tenant time to make representation on their respective view on the level of the revised rent.
  2. Please see notes in the Information Sheet on Third Party Rental Determinations.

Please contact us on 01603 488023 (quoting 3. Rating. List 2010.  110503) if you are in need of advice or assistance on this topic