Frequently Asked Rent Review Questions
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Commercial lease agreements contain provisions for a review of the annual rent at specified intervals during the term of the lease. These are agreed upon at the outset and are dependent on the length of the lease. Typically, they are every three or five years.
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Both landlords and tenants want to ensure that they are charging and paying the ‘going rate’ or a rent amount that’s in line with the current market value. Landlords want a return on their investment. Tenants want to protect their profits and future projections. A registered valuer can help to ascertain what the correct amount of rent should be.
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Unfortunately for tenants, rent reviews are nearly always upward so the best a registered valuer could do would be to agree an unchanged annual rent figure with the landlord.
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Just as the time intervals for reviews are agreed at the outset, so is the method of review. This ensures that there are no surprises for either party and due process is followed. The method of review is contained in the lease.
The rent review process involves the landlord’s and tenant’s representatives proposing their respective valuations and supporting market evidence in order to negotiate a settlement.
“If you are a business taking a new lease, renewing an existing tenancy or you have a rent review coming up, it is important to take advice from a valuer. Rent is usually the biggest quarterly outgoing for any business and it is important you are not over paying. Once rent is agreed, it is likely this cost will be fixed for three to five years so you need to be confident it is the correct market value.
The same goes for landlords in the same position, as a source of revenue, you need to ensure your property is rented to its true market potential.
Whether your property is a shop, office or industrial property Olden Property can provide you with an UpToDate market rent valuation and where required, negotiate the new rent on your behalf. ”
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