Can I Get A Commercial Lease Rent Review?

Have you heard of a rent review and want to know if you can get one for your commercial lease? Generally speaking, a rent review within a commercial lease will happen every 3-5 years. That said, it is dependent on what is agreed between the landlord and the tenant. A rent review clause is required in a commercial property lease because it protects both parties.

There are different types of rent reviews. We look at the main types in this blog. It’s important to note that they are not mutually exclusive. In fact, they can be combined with other commercial lease rent reviews.

• Upward Only Rent Review

This is the most common type of commercial lease. It means that the rent payable never decreases. A landlord will prefer this type of leas because it means that the rent paid will never fall below a certain level. However, these types of commercial leases aren’t great for tenants as they could be stuck paying a rent which becomes above the value of the current market.

• Index Linked Rent Review

The index linked rent review allows the rent to increase in line with an index. This is often seen as the most reliable measure of economic activity. It is often seen as the fairest and most equitable way of increasing the rent. It is possible for an index linked rent review to include a minimum or maximum percentage increase too. This way both parties are still protected from huge rises or drops.

• Open Market Rent Review

The new rent will reflect the market value of the commercial property at the time of the review. As the market value drops or rises, the rent will drop and rise accordingly. That said, parties will often have a minimum level of rent of rent. This rent review is often tied in with an upward only rent review lease agreement too.

• Stepped Increases Rent Review

The stepped increases rent review are not soon as ‘real’ rent reviews. However, they are commonly used and worth knowing about. These is no review mechanism for this type of commercial lease. The rent is payable at various stages instead. The dates for this have been sent out before the commercial lease commences. These can be tricky leases to manage as a tenant and a landlord as the stepped increases may not stay the same as inflation or other market pressures.

Before agreeing to any commercial lease, speak to our commercial property lawyers. We can review the lease with you and ensure you are protected, as a landlord or a tenant.