04 Oct Rent review guide for Tenants
This our step-by-step guide for tenants completing a rent review.
Previously we described the process of a rent review as a landlord. This month our rent review guide is for Tenants and is very different however they do share some similarities. The first steps to take are
- Check the rent review provision within the lease
- At least three months before the rent review date contact the Landlord.
- Wait for the landlord to provide an offer to settle the review with supporting evidence which should be a valuation report.
- Review the offer, if it is reasonable and supported accept the offer.
- If not acceptable ask for a second opinion by an RICS Registered Valuer.
- Subject to the advice make a counter offer and wait for acceptance.
What happens if the Landlord will not accept your counter offer?
Our advice would be to wait for the landlords expectations to meet yours however be aware of the following:
- The back rent on any increase will be payable to the rent review date
- The lowest offer the landlord will make will most likely come in the form of a Calderbank offer (a without prejudice offer to settle).
If you are unable to come to an agreement the lease will set out the next stages which are likely to be one of the following:
- Independent Expert (IE) – decision made by an independent expert using their knowledge of the market and evidence available or
- Arbitration – decision made by an appointed Arbitrator based on the strength of the arguments put forward by each party only
In both cases it is advisable to be represented by a local RICS Registered Valuer who will put the best case forward. Both the IE and Arbitrator will ask for supporting evidence and a valuation report from you and your Landlord.
How is the rent agreed?
The Landlord will probably be looking for an increase in the rent and will normally start the process. If your surveyor suggests that the landlords offer is acceptable and in line with the market rent then it is best to accept it to avoid further costs. Once the rent has been agreed it should be documented with a signed and dated rent review memorandum. A rent review memorandum sets out details of the original lease and parties to the lease and needs to be signed and dated by both Tenant and Landlord. Rent is then payable backdated to the rent review date.
If you have an upcoming rent review and would like some initial advice please contact us
Our next monthly blog will focus in more detail on selling your business. To see our other blogs go to: www.jsreakes.co.uk/blog