Have You Reviewed The Rent Review Clause In Your Commercial Property Lease?

When entering a commercial property lease, as a tenant or a landlord, there is a lot to consider. One of these things is the cluses within the commercial property lease. In this blog post our commercial property lawyers explain the parts of the rent review clause that you need to review and be aware of. A clean rent review will protect both parties, but when it’s not clean it can lead to disputes, confusion and stress.

Here at Burgh Thorpe Solicitors, we have a team of experienced commercial lease law specialists that will ensure you have a clean rent review. As a landlord, this will maintain the value of your asset. As a tenant, this will avoid any arbitrary uplifts. From our experience, rent review disputes and problems arise when the rent review method or timelines are fuzzy.

When it comes to the method, you need to choose the basis of the rent review method. You could choose the open market method. This is commonly upward-only. You could opt for index linked. This tends to be based on CPI+X%. Alternatively, you may choose to have turnover rent which is suitable for certain sectors. It is important that the method is defined precisely. You should also have a fall-back in the case of the method or index becoming discontinued. If you have an index-linked ret review an illustrative calculation will help to avoid confusion.

Is it important that the assumptions and disregards are clearly stated within the rent review clause within your commercial property lease too. For an open market review you will need to list the assumptions such as property in good repair with necessary consents. For disregards you should state the tenant’s improvements, goodwill or damage from insured risks. This will help to keep the hypothetical letting fair.

You will need to set out dates within the rent review clause of your commercial property lease. This should set out review notices and counter-notices. You should also have evidence exchange dates and valuation dates too. It is important that you state the interim rate if the review overruns too.

There need to be a clear outline of what happens if parties cannot agree. Within the rent review clause, you need to specify the appointment of an independent expert or arbitrator. This will need to include the allocation of costs and the powers of the experts.

Need a well signposted rent review process for the clause within the commercial property lease then call our commercial property lawyers. They will ensure that the rent review clause stays focused on the valuation fundamentals rather than the procedural wrangles. Call our commercial property solicitors in Peterborough now to see how we can protect your investment, assets and business.