Rent Reviews

Rent reviews are usually agreed at the end of every five years.  Sometimes this period is reduced to three years.  If a short Lease is granted it may not be appropriate to have any rent reviews.  

The cost of negotiating and agreeing the rent review can be a costly exercise. Surveyor’s may be needed to negotiate the revised rent upon rent review.  All the terms of the Lease should be taken into account on rent review.  Accordingly, if the Lease is particularly onerous, the rent fixed at review should properly be discounted.  This does however, depend upon what the rent review provisions in the Lease say.

The terms upon which the rent review is to be carried out are extremely important.  For instance, it will need to be clarified whether the Tenants works are to be rentalised.  If they are, this will increase the rent that is payable upon rent review.

The position relating to inducements being given at the time of the rent review would also need to be considered.  The Landlord may be reluctant to allow market forces to cause the rent to be discounted upon rent review to reflect the inducements being given at that time to Tenants acquiring Leases, especially if the Landlord has already funded a discount upon the Lease being granted.

It is often advisable to try and agree a mechanism for the rent increasing upon review to avoid the cost and uncertainty of the normal rent review process by, in the alternative, calculating the rent increase by reference to the appropriate increase, by way of example, the retail price index.



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