Rent Reviews and Rating Assessments

1. Your Initial Position

The landlord’s right to increase the rent, and your right to challenge an increase, are detailed in your lease agreement. Read it, and discuss it with your professional adviser, who should specialise in property.

1.1 The frequency of rent reviews is typically once every three to five years.

  • As a tenant, you want rent reviews to be as far apart as possible. Your rent then lags behind any general increase in rents.

1.2 The new rent is usually the open market rental value at the date of the rent review.

  • This is the rent the landlord could expect to receive if the premises were leased to a third party, on similar terms.
  • You may have agreed a low rent for the original lease, but this is irrelevant. It does not entitle you to continue with a low rent.

1.3 If the rent review is ‘upward only‘, the rent cannot go down at the rent review even if the open market value of the rent is lower than your existing rent.

1.4 The lease will include a range of ‘assumptions‘, aimed at making comparisons with other premises easier when deciding the open market rental value. The ‘use of the premises’ assumption can increase or decrease the rental value.

  • If a building can be used either as high-value office space or low-value storage space, the rent will be valued on the assumption that the tenant will use it as an office. It is irrelevant that the tenant may really only be using it for storage.

1.5 The landlord must usually give you notice, in writing, if the rent is to be reviewed. Three months is a typical notice period.

  • This gives you a chance to decide if the proposed increase is reasonable (see 2).
  • If you decide an increase is unreasonable, inform the landlord in writing immediately. Give your reasons.
  • There may be a deadline for replying.If you miss it, you may have to pay the new rent.

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