A rent review is a pre-arranged assessment of the amount of rent that is paid to the landlord or letting agency from the tenant.
The main purpose of a rent review is to protect the landlord from the effects of inflation. However, this can also benefit the tenant, as there is often room for negotiating price of the rent.
A rent review is also a good opportunity for the tenant to ask for certain repairs, replacements or improvements within the property.
For more information on how can assist you with your commercial property, click here.
When does a rent review take place?
Rent reviews usually occur every three to five years. However, this can vary from property to property.
Originally, UK commercial leases were granted for at least 20 years. But with the end of World War II bringing high inflation levels, the average length of a commercial lease decreased, making rent reviews more commonplace.
Negotiating the rent increase
It’s important to keep your eyes and ears open to the rent levels in your local area. This will not only give you a better idea of how much your rent will most likely increase to after your review, but will also give you a higher chance of being able to negotiate a lower price.
TOP TIP: Any evidence that the proposed rent is higher than the fair rent will help with your negotiation, so keep hold of your findings.
It’s important to remember that there are a variety of other factors that may put you in a stronger position to negotiate the rent increase. Some examples are:
You have been a good tenant up until this point, and the landlord is keen for you to continue renting the property.
The local property market is slow and, if you were to leave the property, the landlord would experience difficulty finding another tenant.
The landlord, in one way or another, has failed to live up to his obligations. You will need proof of this.
Resolving a dispute
How to go about resolving a dispute may vary, depending on the contract. However, the usual procedure is that a third party should resolve the disagreement.
This third party should be agreed upon by the tenant and the landlord, and is usually a solicitor or chartered surveyor that specialises in rent reviews.
The resolution could now go one of two ways: either the tenant and the landlord each present their case to the third party, or the third party will decide the new rent based on their expert knowledge.
The process for resolving a dispute is usually relatively quick, but can vary on a case-by-case basis.
If the tenant is unhappy with the decision that has been made, it’s possible to appeal through the courts. However, this often proves costly.
Here at Watsons Solicitors, we have a dedicated team of experts in property law. For a confidential chat about your requirements, do not hesitate to give us a call on 01925 571 212 or fill out our contact form.