Rent Reviews: Why Professional Advice Matters

This month, we are taking a closer look at Rent Reviews and the benefits of obtaining professional advice when a commercial rent review is due. Being well prepared, and having the right professional support, can make a substantial difference to the outcome. 

Whether you are a landlord or a tenant, a rent review presents an important opportunity. Not only to reassess the rent payable, but also to take stock of the wider performance of your business. The rent agreed will usually apply for the next three to five years and can have a lasting impact on profitability, cash flow, and long-term planning. 

 

Understanding When and How Rent Reviews Take Place 

Commercial rent reviews usually occur at fixed intervals during the lease term, most commonly every three or five years. The lease you signed at the outset of occupation will set out the framework for how the review must be carried out. Key lease provisions typically include: 

• The basis of the rent review (for example, open market rent) 
• The timing of the review, including notice periods 
• The procedure to follow if the parties are unable to agree the revised rent 

As with many legal documents, the details matter. The lease should clearly define the mechanism for agreeing the new rent, but these clauses are often complex and open to interpretation. This is where professional advice becomes particularly valuable. 

In most cases, the rent is reviewed to market rent, being the level of rent that a willing tenant would reasonably pay to a willing landlord for a similar property in the area at the review date. While this sounds straightforward, assessing market rent requires careful analysis of comparable evidence, lease assumptions, incentives, and current market conditions. 

 

A Naturally Adversarial Process 

The rent review process often creates an adversarial environment. Landlords naturally aim to secure the highest possible rent to protect their investment, while tenants seek to minimise occupational costs and protect business viability. 

Difficulties can arise when a proposed rent: 

• Is not commercially viable for the tenant’s business 
• Appears significantly higher than rents being achieved on comparable properties nearby  
• Does not fully reflect current market conditions 

In these situations, taking early advice from an RICS Registered Valuer can be crucial. The rent agreed will apply for the duration of the next review period, so even a relatively small adjustment can translate into a substantial saving, or cost over time. 

 

The Value of Professional Representation 

A qualified valuer will provide an independent assessment of market rent, supported by robust evidence, and act on your behalf during negotiations. Professional advice can: 

• Ensure the rent reflects true market conditions 
• Strengthen your negotiating position 
• Save time and avoid prolonged disputes 
• Identify alternative concessions where rent movement is restricted 

Importantly, a professional understands how lease wording, assumptions, and disregards affect value. Details that are often overlooked but can impact the outcome. 

 

Rent Review Outcome – Case Study 1 

We were instructed by an existing client with a rent review due on a public house in Bristol. The landlord had proposed a rent increase of £5,000 per annum. 

Our role was to prepare a detailed market rent valuation and conduct negotiations on the client’s behalf. The landlord subsequently appointed their own surveyor, and negotiations took place over several meetings. 

Following detailed discussions and presentation of comparable evidence, the landlord ultimately agreed not only to withdraw the proposed increase but to accept a £5,000 per annum reduction in rent. Compared to the landlord’s original position, this represented a £10,000 per annum swing. Over a five-year review period, this equated to a £50,000 saving for the client. 

While not every case will achieve such a positive outcome, this example demonstrates the tangible value of expert advice. At the very least, a professional RICS surveyor will robustly represent your position, subject to the lease structure. 

 

Rent Review Outcome – Case Study 2 

In another recent case, we acted for a landlord with a retail store and maisonette above. The tenant (a large national) was refusing to accept a rent increase even though the rent had remained the same for the last 10 years. We were able to engage with the Tenant and then the Tenants agent and negotiate a rent increase of over £5,000 per annum.  

 

Rent Review Outcome – Case Study 3 

We were contacted by the tenant of a commercial property in Bristol. The Landlord of the property had served on the tenant notice of a significant rent increase.  Our valuation analysis supported the conclusion that the existing rent reflected market levels. As a result, the rent itself remained unchanged. 

However, negotiations did not end there. By engaging professionally with the landlord’s surveyor, we were able to secure a significant relaxation of trading terms within the lease. This was a tied lease, and terms were sought under the Pubs Code. This flexibility enabled the tenant’s business to operate more efficiently and improve overall profitability, demonstrating that a successful rent review outcome is not always solely about the headline rent. 

 

“Upwards Only” Rent Reviews and Market Reality 

It is important to remember that many commercial leases contain an “upwards only” rent review clause, meaning the rent cannot formally decrease even if market conditions weaken. 

That said, market realities matter. Following the disruption caused by the Covid-19 pandemic and continued economic uncertainty, many landlords have become more pragmatic and willing to adopt flexible solutions. While the rent figure itself may remain unchanged, landlords may agree to alternative concessions, such as: 

• Relaxed trading or use clauses 
• More flexible payment terms 
• Adjustments to insurance or service charge arrangements 
• The grant of additional space or lease variations 

A professional can help identify and negotiate these opportunities where a strict rent reduction is not possible. 

 

Start Preparing Early 

Our advice is simple: review your lease and start preparing for a rent review at least six months in advance. Early preparation allows time to: 

• Understand your lease obligations 
• Gather market evidence 
• Assess business affordability 
• Plan a negotiation strategy 

Whether you are a landlord or tenant, informed preparation and professional advice can lead to a more balanced, commercially sensible outcome. 

We are regulated by the RICS. If you require further advice on lease terms, rent reviews, valuation, or need professional advice then get in contact with us on  [email protected] or 01179 200090.