Commercial rent review

Commercial rent reviews are crucial in ensuring that the rent paid for a property reflects current market values.

Whether you’re a landlord aiming to maximise returns or a tenant looking to manage costs, a fair and timely review protects both parties’ interests. The process can be complex, requiring legal and market expertise to ensure it’s handled properly.

Our commercial conveyancing solicitors provide clear, practical guidance through every stage of a rent review, helping you secure the best outcome while avoiding disputes and delays.

What is a commercial rent review?

A commercial rent review is the process of adjusting the rent during the lease term, usually every three to five years, to ensure it reflects the current market rate. This process is set out in the lease and often leads to negotiation between landlord and tenant. While the outcome could result in an increase or no change, rent reviews are typically designed to ensure rent stays in line with market conditions or pre-agreed factors like inflation.

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• Rent review memorandum

How we assist with commercial rent reviews

We provide tailored support to help you navigate rent reviews effectively. Our commercial conveyancing solicitors assist with:

Lease review

Analysing the lease terms to clarify rent review provisions and ensure all parties are aware of their obligations.

Market analysis

Arranging expert valuations to assess whether the proposed rent aligns with current market rates.

Negotiation

Representing your interests in discussions with the other party to achieve a fair result.

Dispute resolution

Resolving disagreements through mediation or arbitration, should a dispute arise.

Key factors in a commercial rent review

The terms of a commercial rent review are influenced by several key factors that shape the outcome of the process. One of the most important considerations is market rent, which reflects the current rental value for comparable properties in the area. Ensuring that the rent reflects the going rate helps to keep the agreement fair for both landlord and tenant. Another common factor is index-linked reviews, where rent adjustments are tied to an inflation index, such as the Retail Prices Index (RPI). This ensures the rent keeps pace with inflation, adjusting incrementally over time.

Many leases also include upward-only clauses, meaning the rent can only increase or remain the same, even if market rents fall, providing security for the landlord. Finally, timing and deadlines are critical; rent reviews must be completed within the timeframes specified in the lease agreement to avoid disputes. Understanding these elements is crucial for ensuring that the rent review process runs smoothly and remains in accordance with the lease terms.

What is the commercial rent review process?

The commercial rent review process allows landlords and tenants to adjust the rent during the lease term, typically at agreed intervals outlined in the lease. On the review date, the landlord usually serves notice to the tenant, proposing a new rent based on market conditions, property value, or a predetermined formula set out in the lease agreement. The aim is to ensure the rent reflects the current market value of the property.

Once notice is given, both parties enter into negotiations to agree on the new rent. If they reach an agreement, the revised rent is confirmed and applied from the review date. However, if negotiations fail, an independent third party, such as a surveyor, may be appointed to assess the property and determine a fair market rent. This process ensures the rent remains fair and in line with the current market during the term of the lease.

Can a commercial rent review be backdated?

Yes, a commercial rent review can be backdated. If the review process takes longer than expected and the rent increase is agreed upon or determined after the review date, the new rent can be applied retroactively from the original review date. The tenant would typically be required to pay the difference between the old rent and the revised rent for the period since the review date. The terms for backdating are usually outlined in the lease agreement.