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10 Tips for Handling a Rent Review
- Author: Anthony Crocker
Anthony Crocker, Director of Professional Services, gives his view on the most important issues to consider when a rent review is looming.
Rent reviews are crucial when it comes to tenants seeking to reduce property costs and landlords looking to increase values of their properties.
The procedure for the rent review is governed by the lease. Therefore both landlords and tenants must familiarise themselves with the lease and more specifically the rent review clause to optimise their position at review.
Below, we look into the more important aspects of the rent review clause as well as some other useful tips:
1. Make sure you have all the lease documents
Ensure you have a copy of the lease available as well as any other licences, deeds or memoranda. By doing this a picture can be formed before negotiations commence including the demise, current rent and any improvements or alterations which should be disregarded.
2. Is time of the essence?
It is crucial to discover whether the rent review has to be operated at a particular time and whether any formal notices or counter notices are required. This is what is meant by ‘time of the essence’
For example, a tenant may have to serve a counter notice on the landlord within one month of the landlord’s trigger notice, if they fail to respond the tenant has agreed to the landlord’s proposed rental increase – a costly error! Here at Hellier Langston we can provide the necessary advice to ensure such errors are not made.
3. Knowledge of the rent review date
By knowing this you can avoid strict ‘time of the essence’ provisions, and can be aware of the date of valuation.
4. Upwards only rent review?
Most rent review clauses allow for upwards only reviews, which means that the rent cannot decrease from the previous rent. Always check the lease to make sure this is correct.
5. Assumptions & disregards
The rent review clause outlines precisely how property will be valued at the review. This will include a number of assumptions and disregards regarding the property and the lease. Because of their role in determining the rent it is critical that these are understood.
6. Market Knowledge
Deals being completed in the local property market will have a big impact on the rental value. With our in depth market knowledge, Hellier Langston can provide you with advice on values and tactics in your rent review negotiations.
If an agreement cannot be met with the other side, it is advisable to appoint a surveyor to negotiate on your behalf. Hellier Langston specialise in rent review negotiations and will be able to negotiate the best possible result for you.
8. Third party
A rent review can be referred to third party if an agreement cannot be reached. They will act as an arbitrator or an independent expert. It is important to appoint a surveyor who will be able to produce a comprehensive third party report to provide the best possible chance of the determination being made in your favour, which will potentially save you the costs of third party referral. Hellier Langston have a wealth of experience in this field and will be able to deal with the whole process for you.
9. Late settlement
A prolonged negotiation will incur interest charges and back rent. Try to settle the review at the earliest opportunity and budget for the increased costs and rent should the negotiations run past the review date.
10. Document it
Once the rent review has been settled, make sure you have memoranda signed by both parties stating the new agreed rent and attach it to your copy of the lease, this way you have proof that the review has been agreed and formalised.
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