The Rent Review provisions of commercial property leases are usually open to wide ranging interpretation. It is therefore important to take professional advice early on to ensure that any increases in rent are kept to an absolute minimum.
The eventual outcome of your rent review will depend on the precise wording of your lease and the nature of comparable rental evidence available in the marketplace.
Your Landlord will want to prove that an increase in your rent is justified. Naturally, you will want to argue the opposite. The two arguments usually focus on an analysis of market transactions involving properties similar to your own. The details of these transactions are referred to as ‘comparable evidence’ or ‘market comparables’.
The formal rent review process is fraught with danger for the uninitiated. For example, recent Case law and primary legislation has caused confusion in many areas and it is quite possible for two identical properties to be valued at two different rental values due to subtleties in the interpretation of comparable evidence.
Occasionally, it may be in your interests to serve the Landlord with a rent review notice. Whether you or your Landlord decides to initiate proceedings, failure to reach agreement usually leads to determination by a third party acting either as an independent expert or as an arbitrator.
If your Landlord has served a rent review notice you will would be well advised to seek professional advice at the earliest opportunity. For example, if your lease explicitly states that “time is of the essence” there may be strict time limits imposed on the service of your counter-notice. Ignorance is no defence so inaction carries significant risks for your business as your rent could rise significantly without professional representation.