RENT REVIEWS
If you’ve ever signed a commercial lease agreement, whether as a landlord or tenant, you’ll know that rent reviews are part and parcel of renting commercial premises.
A commercial property rent review is a means of evaluating and adjusting the level of rent that’s being paid and, when a change of circumstances or market values arise, they’ll almost inevitably mean an increase in the level of rent that a tenant will pay.
Trinity Rose Chartered Surveyors’ teams are experts in rent review assessments and trusted support for landlords and tenants contact us if you are proposing changes to the rent you charge or want to defend yourself against an increase.
Our team of experts will ensure you get a fair deal when it comes to rent reviews and negotiations
The wording of your commercial lease will determine how and when your rent is reviewed, so it’s important to rely on expert advice and strong negotiating skills when you embark on a new commercial lease transaction. This way you’ll ensure you avoid any unexpected increases as a tenant or, in the case of landlord, potential challenges to your proposed changes.
Commercial rent reviews traditionally take place every three to five years and will be based on various methods – most commonly, an open-market assessment will determine the property’s current market value. Alternatively, a review may be based on business turnover or a periodic review may base any changes according to the intervals set out in your lease document and will usually fall in line with Retail Price Index (RPI) fluctuations.
Trinity Rose Chartered Surveyors act for both landlords and tenants in valuing, assessing and collating market evidence to support or defend a proposed change in a commercial rent. Appointing a team of experts to ensure you get a fair deal should be your first step when it comes to rent review negotiations.
To get expert guidance and support from Trinity Rose Chartered Surveyors’ rent reviews specialists, please contact us.
- Valuation expertise to support landlords and tenants
- Negotiated rent review terms that suit both parties
- Powerful support for tenants in defence of a rent increase
- Commercial rent review appraisal and management
We offer Rent Reviews in Hampshire, Dorset and Surrey, including Alresford, Alton, Bournemouth, Basingstoke, Brockenhurst, Bishops Waltham, Chandlers Ford, Chichester, Christchurch, Fordingbridge, Farnham, Lymington, Lyndhurst, Park Gate, Portsmouth, Poole, Parkstone, Petersfield, Ringwood, Romsey, Southampton, Salisbury, Winchester, Verwood, The New Forest and Wimborne and the surrounding areas.
FAQs
What is a rent review for commercial property?
A rent review is the process of periodically evaluating and adjusting the level of rent being paid by the tenant, to reflect changes in market conditions or other circumstances.
Why are rent reviews important?
Rent reviews allow landlords to ensure they are receiving a fair market rent for their commercial property and for tenants to challenge increases proposed if they are considered unreasonable.
When do rent reviews typically occur?
Rent reviews typically take place every 3 to 5 years, depending on what is agreed in the commercial lease.
How often should rent reviews be done?
The frequency of rent reviews must be specified in the lease agreement, but traditionally they are done every 3 to 5 years.
What is the Commercial Rent Review Process?
The Commercial Rent Review Process is typically as follows:
- Notice: The landlord serves notice to the commercial tenant with proposed changes to rent.
- Assessment: The rent is assessed to determine the property’s current market value, using a variety of factors.
- Negotiation: Both parties will typically appoint surveyors to negotiate suitable terms for both. The tenant may serve a counteroffer at this stage;
- Agreement: A new rent value has been agreed upon when both parties reach a mutually acceptable figure. If an agreement cannot be reached, the lease dispute resolution process is followed (i.e. arbitration).
How is the new rent determined?
The method of determining new rent is specified in the rent review clause of the commercial lease.
The most common method is open-market assessment, which involves factors such as the property’s size, location, condition and current market trends.
Alternatively, the new rent may be based on business turnover or according to the interval set out in the lease documents, usually in line with Retail Price Index (RPI) fluctuations.
What factors influence rent reviews?
There are several factors which may influence rent reviews, including the current market rental rates for similar commercial properties, the location and the size of the property, the condition of the premises, as well as supply and demand in the local market.
What happens if the landlord and tenant disagree with the new rent?
If the landlord and tenant disagree with the new rent, the lease will specify a dispute resolution process. This typically involves appointing a third-party arbitrator to determine the current value of the commercial property.
Can tenants challenge a rent review?
Yes, tenants have the right to challenge the terms of a rent review and enter into negotiations with the landlord.
What should tenants do before a rent review?
Before a rent review, tenants should read through the rent review clause of their lease agreement to understand the process and the specified methods that will be used to determine the new rent. It is essential to seek professional advice from an experienced surveyor who will act on the tenant’s behalf to value, assess and collate market evidence to support or defend the proposed change in rent.
Are rent reviews common in commercial leases?
Yes, rent review clauses are common in commercial leases, especially for leases that are longer than 3–5 years.
How can landlords prepare for a rent review?
Landlords can prepare for a rent review by gathering relevant market data and evidence of current market rents for similar properties to support the proposed rent increase. This typically includes appointing a professional surveyor with commercial rent review management expertise.
What is the 21-year rule for rent review?
The 21-year rule refers to a specific provision under Section 34 of the Landlord and Tenant Act 1954. It is concerned with how improvements made by the tenant to the leased property may affect the rent during lease renewals.
Under this rule, improvements may be disregarded when establishing new rent if they were completed no more than 21 years before the application for lease renewal. The rule aims to protect the tenant since the improvements in property funded by the tenant will likely lead to increased rent value on review.
What is the difference between a rent review and a lease renewal?
A rent review concerns adjusting the rent paid by the tenant based on the provisions of the lease. It occurs periodically during the commercial lease term. A lease renewal occurs at the end of the lease term and is related to negotiating a new commercial lease agreement.
Can a rent review be backdated?
Rent reviews can sometimes be backdated if the tenant fails to respond or engage in the process within the outlined timeframe or both parties agree on a retrospective rent review due to an oversight. This will depend on the wording of the rent review clause in the commercial lease.
Can you increase rent without a rent review clause?
No, the landlord can only adjust the rent if the lease contains a rent review clause. Without the clause, the rent will remain fixed for the entire lease term.
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Trinity House, 123 Winchester Road, Chandlers Ford, Hampshire SO53 2DR
t: 01962 888900
Trinity House, 123 Winchester Road, Chandlers Ford, Hampshire SO53 2DR
t: 02382 002500
Trinity House, 123 Winchester Road, Chandlers Ford, Hampshire SO53 2DR
t: 01962 880426
Top Floor, Trinity House, 123 Winchester Road, Chandlers Ford, Hampshire SO53 2DR
t: 01962 888900
Trinity House, 123 Winchester Road, Chandlers Ford, Hampshire SO53 2DR
t: 02382 002500
