Commercial Rent Review
Managing Rent Review & lease renewal
Negotiating commercial rent reviews and lease renewals efficiently and effectively.
As either a Tenant or Landlord of a commercial property, you’ll be all too aware of the fact that Commercial Rent Reviews come around faster every time. Without proper planning this can cause all sorts of problems, and may restrict your cash flow.
By preparing for a Rent Review or Lease Renewal ahead of time, both Landlords and Tenants can prepare for any rental increases and plan for any changes to their current situations. At Taylor Chartered Surveyors we are here to help ease this process.
Regulated by the RICS, our rent review surveyors assess the market rent at the time of renewal and negotiate on behalf of our clients. Our aim: to secure fair rental costs for our clients by providing impartial advice based on our professional intelligence and market knowledge.
If your Rent Review is coming up,
or you are concerned about your rental costs,
speak to one of our expert rent review surveyors today.
What is a Rent Review?
A Rent Review is a formal process which allows Landlords and Tenants to negotiate the increase or decrease in commercial rental costs based on market value at the time of review. Although Rent Reviews generally take place every 3 to 5 years, they can take place at any interval specified in the Rent Review Clause of a Commercial Lease.
The Rent Review Clause should also determine:
- The method of the review
- Things that are to be assumed in the Review
- Items to be disregarded by a valuation
- The negotiation procedure
- How disputes should be resolved should they arise
Failure to properly conduct a Rent Review can lead to a loss of income, which both parties will want to avoid. Working for both Landlords and Tenants, we are here to ensure that a Market Rent is agreed in a time conscious manner so that both parties can plan for the future.
What is a Lease Renewal?
As a Commercial Tenant at the end of your lease you only have the right to remain in the property if your Landlord has not served you with a Section 25 Notice, and if your tenancy falls under the Landlord and Tenant Act 1954. In this case you have a couple of options open to you:
- You can avoid triggering the renewal process and continue on current terms in order to get a market rent valuation and afford yourself flexibility.
- You can choose to start the process in order to secure long term tenancy or take advantage of drops in rental costs.
If your Landlord has issued a Section 25 Notice you will need to respond in kind. This is time sensitive and requires that you act fast. Conversely, if this Notice has not been served, the Lessee can serve a Section 26 Notice requesting a new lease, and propose terms for renewal.
Even if you are protected by the Landlord and Tenant Act 1954, its terms are limited and may require you to prove that your Landlord’s terms are unjust on the grounds of unreasonableness, which can be a time consuming, costly process.
Assessment of Rental Value
Taking into consideration your previous rent and other relevant documentation or improvements to the property, we will inspect the property, take measurements and record any findings we may make. In addition we will conduct an investigation into local rent costs and, using our professional expertise, produce a formal Rent Review Report.
Negotiations
Acting on your behalf we will be happy to enter into talks with the Landlord, Tenant or their representatives in order to negotiate the rent. During this time we have two main objectives: to negotiate a rent that we believe is fair for our client, and to maintain a cordial relationship between both parties. In all cases we will try to avoid the unnecessity of going to a third party.
Third Party Determination
In the unlikely event that terms cannot be agreed upon, we will produce written documentation as Expert Witnesses for our clients. This will be passed on to Arbitrators of Independent Experts who will attempt to resolve the dispute.
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Commercial Rent Review
Frequently Asked Questions (FAQs)
A commercial rent review is the process of reviewing the rent payable under a commercial lease at agreed intervals. The new rent is assessed in line with the lease terms and current market conditions.
Most commercial leases include a rent review every three or five years, although the timing depends on the terms of the lease.
The revised rent is usually assessed by considering comparable rental evidence, the property’s location, size, condition, permitted use, lease terms, and current market conditions
An experienced RICS Chartered Surveyor can provide an independent rent review valuation, advise on market evidence, and negotiate on behalf of landlords or tenants.
This depends on the lease provisions. Some leases provide for upward-only rent reviews, while others allow the rent to increase or decrease based on market conditions.
If an agreement cannot be reached, the lease usually sets out how the dispute should be resolved. This may involve an independent expert, an arbitrator, or another agreed dispute resolution process.
During a rent review, the surveyor considers comparable rental evidence, the lease terms, the property’s size, specification, location, tenant obligations, and current market conditions to determine an appropriate market rent.
A specialist commercial rent review surveyor understands lease provisions, market evidence, and negotiation strategies. They can help landlords and tenants achieve a fair, evidence-based rental outcome.
The timescale depends on the complexity of the lease and how quickly both parties reach an agreement. Some rent reviews are completed within a few weeks, while others may take several months.
Our experienced commercial surveyors provide independent rent review advice, analyse market evidence, negotiate on behalf of landlords and tenants, and work to achieve fair and commercially balanced outcomes.