We were instructed to act for a landlord client on an outstanding rent review which was due a number of years ago. As the lease was clear that time was not of the essence, we were able to instigate the review with the intention of seeking an increase in rent for the landlord which could be backdated to the review date.
The property was a dated industrial unit, situated in a popular and established estate, with difficult loading access and no direct comparable evidence from the area that could be applied. The tenant was also represented during negotiations and their agent also encountered difficulties in identifying any relevant evidence that could be applied to the review date. Evidence obtained by both surveyors was either for smaller premises, units which were not in the immediate vicinity or transactions which fell out of the review timeframe.
Although our aim was to achieve the best result for our client and Calderbank offers had been discussed with our client, we recognised that we needed to work amicably with the tenant’s surveyor in order to reach a compromise which both parties would find mutually acceptable. This involved applying reasonable adjustments to the evidence put forward to the tenant’s surveyor for it to become more applicable to the subject property ie. allowances were made to reflect quantum, location, access differences etc. During negotiations, alternative solutions were also discussed so as to exhaust all options. These included the potential for a reversionary renewal and a re-gearing of the existing lease due to the existing lease Term expiring in the near future.
It was eventually decided that the review would be dealt with as initially intended. Both parties accepted that neither had a straight forward and clear-cut argument to make when supporting their opinion on what the right rent should be. A compromise was therefore made, whereby the tenant perhaps paid slightly more than they felt to be the right rate per ft² and the landlord accepted slightly less. However, in both being willing to move away from their original stance, their relationship has been maintained, and discussions are expected to re-open for one of the alternative solutions. This will give both parties certainty moving into the future, allowing the tenant to have security to reinvesting into their business and giving the landlord further longer-term assurance of their property investment.
Need help with a rent review or lease re-gear? Visit our Lease Advisory page: Expert Lease Advisory services for Landlords and Tenants – Vickery Holman
