Rent Review Disputes

Understanding Rent Review Provisions

If you own a property which you have let out on a long lease, then it is important to be aware of the relevant lease provisions in advance of a rent review date. Whilst landlords and tenants are free to reach their own agreement on a new rent, this is not always possible for a variety of reasons. This may cause you to reach an impasse with your tenant and feel like your hands are tied. In this article, we discuss a number of relevant considerations in the event of a dispute over rent review.

How Lease Terms Govern Rent Review Disputes

Rent review disputes are largely governed by the terms of your lease, and so the necessary approach can vary. However, there are often standard terms which are frequently used when drafting a lease. For example, you may worry that, if there has been a decrease in the average rent in the area or the value of your property, you may be forced to accept an amount which is even less than the existing rent for your property. In anticipation of this issue, leases will often include provision within a lease for reviewed rent to be no less than the existing rent.

Serving Notice to Propose a Revised Rent

In order to propose a revised rent, you would firstly need to serve the relevant notice on the tenant. The notice would set out the increased rent which you are proposing and the date from which such increase takes effect. The tenant would then have a fixed period of time to consider the rent you have proposed, and communicate either their acceptance or rejection to you.

Instructing an Independent Expert

If you are not able to reach an agreement with your tenant on what the new rent should be, then most leases will also provide for the instruction of an independent expert to determine the fair market rent for the property. The landlord and tenant would usually share the cost of this equally, and agree to be bound by the decision of the expert. This approach avoids the need for either party to incur the costs of pursuing the matter at Court.

Need Assistance?

If you require assistance with a rent review dispute, contact Matt Spencer in our Commercial & Real Estate Disputes team.