Commercial leases will generally include a clause dealing with rent review. The purpose of a rent review clause is to allow for a review, in accordance with a specified timetable, to establish whether the rent should change over time. This clause enables tenants to stay in properties for long periods of time without the landlord losing out as the market around the property increases. It allows for a negotiation between the parties to ensure fairness for both sides.

At Lewis Nedas Law, we are expert leasing solicitors. We have a skilled team with over thirty years of experience. We represent both tenants and landlords and work with you to protect your interests in any commercial leasing negotiation. Below we offer an insight into some of the key elements of a rent review procedure. If you have any questions about rent review, do not hesitate to get in touch with our team, who are always happy to help.

How and when can rent be reviewed?

The rent review clause in your lease will answer these questions. Generally, the period for review will be every 3 – 5 years, but it can be significantly more or less depending on the term of the lease.

The way in which rent will be reviewed and calculated also depends on the specific clause in your lease. There are several different approaches to reviewing rent. An open market rent review is one of the most common. This means that the rent is reviewed in accordance with the market trends. Essentially the question to be asked is, if the property was to be let at the date of the review, what would the rent be? While this suggests that the rent can be reviewed up or down, depending on how the market is performing, usually there will be a clause in the lease saying that rent can only be reviewed upwards.

Another common form of rent review is based on turnover rent. This means that the rent review links directly to the tenant’s turnover. Therefore, if the tenant has a high turnover, the Landlord will receive more rent.

You should also note that it is not uncommon for leases to contain rent-free periods or stepped rents. A rent-free period will generally be at the beginning of the lease, meaning that rent is not payable until a particular time. A stepped rent means that the rent increases every year in specified increments – for example, £10,000 in year 1; £12,000 in year 2; £15,000 in year 3 and every year thereafter.

It is therefore very important you understand the terms in your lease, as these will dictate how your rent is reviewed. Rent review can have a significant impact on your business and you ought to have a clear understanding of how rent may increase over time. Our team of specialist commercial property solicitors have a robust and in-depth understanding of this area. We will advise you, in plain English, on the best options for you when negotiating a lease and when reaching a rent review.

Contentious rent reviews

In most cases, the landlord and tenant will negotiate the rent review, based on the provisions set out in the lease. Solicitors can be involved at this stage and can assist throughout the negotiation process.

However, in some cases, the landlord and tenant will not be able to agree. Again, the lease usually deals with how this situation is managed. Generally, there will be terms which involve an arbitrator or independent expert being appointed to resolve the dispute. This third party is often a surveyor who will use their expert skills to settle the dispute.

Documenting a rent review

It is essential that, once an agreement has been reached, this is properly documented. This will usually involve solicitors drafting a short rent review memorandum which indicates when the rent was reviewed, the date upon which the new rent applied from, and the level of the new rent. Both parties will then sign the rent review memorandum. It is good practice for this to be done even if a nil uplift is agreed as these documents act as proof that the parties reviewed the rent as per the lease and can be useful in the event of any future disputes about rent.

Get in touch

The rent review process can be incredibly complex and contentious. It is important that both landlord and tenant seek advice as early as possible. You should seek specialist support when negotiating a lease in order to ensure that your interests are protected. It is also vital at this stage that you understand how rent will be reviewed and how that may impact your business in the future. Equally, when it comes to the rent review negotiation, it is crucial that you have expert advice. You need to speak to a solicitor with a strong knowledge of the commercial market and your industry. To to participate in the negotiations, you will need informed, commercial advice.

At Lewis Nedas, our team of Property Solicitors have broad experience in all manner of rent review procedures. We have successfully advised clients with highly complex leases and regularly negotiate rent review documentation.

To speak with one of our Property Lawyers, please contact us on 020 3811 3589 or complete our online enquiry form. At Lewis Nedas we are proud to support individuals and businesses in the day to day operations of their business. We understand how important your business is to you and will work hard to protect your interests.

At Lewis Nedas Law, we are expert leasing solicitors. We have a skilled team with over thirty years of experience. We represent both tenants and landlords and work with you to protect your interests in any commercial leasing negotiation. Below we offer an insight into some of the key elements of a rent review procedure. If you have any questions about rent review, do not hesitate to get in touch with our team, who are always happy to help.

How and when can rent be reviewed?

The rent review clause in your lease will answer these questions. Generally, the period for review will be every 3 – 5 years, but it can be significantly more or less depending on the term of the lease.

The way in which rent will be reviewed and calculated also depends on the specific clause in your lease. There are several different approaches to reviewing rent. An open market rent review is one of the most common. This means that the rent is reviewed in accordance with the market trends. Essentially the question to be asked is, if the property was to be let at the date of the review, what would the rent be? While this suggests that the rent can be reviewed up or down, depending on how the market is performing, usually there will be a clause in the lease saying that rent can only be reviewed upwards.

Another common form of rent review is based on turnover rent. This means that the rent review links directly to the tenant’s turnover. Therefore, if the tenant has a high turnover, the Landlord will receive more rent.

You should also note that it is not uncommon for leases to contain rent-free periods or stepped rents. A rent-free period will generally be at the beginning of the lease, meaning that rent is not payable until a particular time. A stepped rent means that the rent increases every year in specified increments – for example, £10,000 in year 1; £12,000 in year 2; £15,000 in year 3 and every year thereafter.

It is therefore very important you understand the terms in your lease, as these will dictate how your rent is reviewed. Rent review can have a significant impact on your business and you ought to have a clear understanding of how rent may increase over time. Our team of specialist commercial property solicitors have a robust and in-depth understanding of this area. We will advise you, in plain English, on the best options for you when negotiating a lease and when reaching a rent review.

Contentious rent reviews

In most cases, the landlord and tenant will negotiate the rent review, based on the provisions set out in the lease. Solicitors can be involved at this stage and can assist throughout the negotiation process.

However, in some cases, the landlord and tenant will not be able to agree. Again, the lease usually deals with how this situation is managed. Generally, there will be terms which involve an arbitrator or independent expert being appointed to resolve the dispute. This third party is often a surveyor who will use their expert skills to settle the dispute.

Documenting a rent review

It is essential that, once an agreement has been reached, this is properly documented. This will usually involve solicitors drafting a short rent review memorandum which indicates when the rent was reviewed, the date upon which the new rent applied from, and the level of the new rent. Both parties will then sign the rent review memorandum. It is good practice for this to be done even if a nil uplift is agreed as these documents act as proof that the parties reviewed the rent as per the lease and can be useful in the event of any future disputes about rent.

Get in touch

The rent review process can be incredibly complex and contentious. It is important that both landlord and tenant seek advice as early as possible. You should seek specialist support when negotiating a lease in order to ensure that your interests are protected. It is also vital at this stage that you understand how rent will be reviewed and how that may impact your business in the future. Equally, when it comes to the rent review negotiation, it is crucial that you have expert advice. You need to speak to a solicitor with a strong knowledge of the commercial market and your industry. To to participate in the negotiations, you will need informed, commercial advice.

At Lewis Nedas, our team of Property Solicitors have broad experience in all manner of rent review procedures. We have successfully advised clients with highly complex leases and regularly negotiate rent review documentation.

To speak with one of our Property Lawyers, please contact us on 020 3811 3589 or complete our online enquiry form. At Lewis Nedas we are proud to support individuals and businesses in the day to day operations of their business. We understand how important your business is to you and will work hard to protect your interests.