Rent reviews in commercial leases

The components of a rent review for commercial properties that may affect rental value, as well as the ability to make qualitive adjustments, are primarily based on the available facts to obtain a negotiated settlement.

Rent reviews

Rent reviews can be a source of contention between landlords and tenants due to their conflicting perspectives on where the rent should be set. Typically, landlords prefer higher rents while tenants prefer the rent to be lower.

As surveyors, we assist in reducing conflict between the landlord and tenant by undertaking an analysis of the evidence available to determine the market value of the property, applying our knowledge and expertise within the market place as well as balancing clients’ expectations.

Rent reviews are triggered by the rent review date, as set out in the Lease. A commercial property’s rent is typically reviewed every three or five years, depending on the length of the lease. For longer leases, the rent reviews could have a longer period between the anniversary of each review.

Rent review clause

There are several types of rent review clauses, all of which require an understanding of the mechanics involved in determining the market rent.

A rent review clause provides the landlord the chance to examine the amount of rent paid by the tenant during the period of the lease.

Rent review process

• Instructions – conflicts; qualifications; terms of engagement
• Pre-inspection – gather documents; review lease; identify notice requirements
• Inspection – measurement; alterations; comparables
• Report – comparable enquiries; client requirements; ERV; recommendations
• Negotiations – tactics; timing; writing or face-to-face
• Resolution – negotiated settlement or disputed resolution; documentation

Different types of rents

• Open market rent
• Index related
• Fixed or stepped uplifts
• Turnover and/or profit related
• Short leases / licences with no fixed rent review

Need assistance with rent reviews or any other landlord and tenant matters? Contact our team here https://www.forgeproperty.co.uk/contact-us/