Commercial Rent Reviews

Commercial rent review is a process that allows for the periodic adjustment of the rent payable under a commercial lease agreement. It typically occurs at predetermined intervals during the lease term and is intended to ensure that the rent remains fair and reflects current market conditions. Rent reviews can help both landlords and tenants by maintaining a balance between the rental income for the landlord and the affordability for the tenant.

The specifics of commercial rent review can vary depending on the jurisdiction and the terms agreed upon in the lease agreement. Here are some common types of rent reviews:

1. Upward Only Rent Review: This is a common type of rent review where the rent can only increase and cannot be reduced. It ensures that the rent will either stay the same or go up, based on market conditions or a predetermined formula.
2. Open Market Rent Review: In an open market rent review, the rent is adjusted based on the prevailing market rental rates for similar properties in the area. Usually, an independent surveyor or valuer is appointed to assess the current market rent and determine the new rental value.
3. Indexed Rent Review: With an indexed rent review, the rent is adjusted according to a specific index, such as the Consumer Price Index (CPI). The rent increase is calculated based on the percentage change in the chosen index since the last rent review.
4. Fixed Percentage Increase: Some leases may include a fixed percentage increase for rent reviews. For example, the lease may stipulate that the rent will increase by 3% each year or every few years, regardless of market conditions.

The specific procedures for rent reviews, including timing, notice periods, and dispute resolution mechanisms, should be clearly outlined in the lease agreement. It is essential for both landlords and tenants to carefully review and understand these provisions to ensure compliance and avoid any misunderstandings or disputes.

In the event of a disagreement or dispute regarding the rent review, it may be necessary to seek professional advice from a surveyor, valuer, or legal expert who specializes in commercial property matters. They can help interpret the lease terms, assess market conditions, and provide guidance on the appropriate course of action.

It's important to note that commercial rent review practices can vary significantly based on local laws and customs. Therefore, it is advisable to consult with a legal professional or commercial real estate expert in your specific jurisdiction for accurate and up-to-date information.

Contact our Commercial department today for advice on your Commercial rent reviews: 01902 907222