The complexities of a rent review; dental surgery case study

rent review dental surgery

We recently completed a rent review of a dental surgery on the Dorset/Somerset boarder, on behalf of the landlord. They had received a letter from the tenant stating they wanted the rent to stay the same at £22,500 per annum. They then contacted us for advice and instructed us to negotiate the rent review. With a dental surgery or other healthcare setting, there are many similarities with conducting a review of an office property, but there are also some differences, namely in the measurement of the property and the comparable evidence used.

Rent Review Dental Surgery

When doing a rent review, our first step is to turn to the lease for an in depth look at the rent review clause. Here we will find out what basis the review should be conducted, what assumptions and disregards should be applied and what should be done if the parties cannot agree on a rent.

Next is the inspection. The measurement of surgeries differs slightly from offices in that additional spaces are included that are usually excluded from office measurements, such as corridors used as waiting areas and patient toilets. The inspection will also take into account the number of treatment rooms, storage requirements and any parking available to staff and patients.

To calculate the Market Rent for the property we looked at dental surgery rental transactions in the area, as well as veterinary surgeries and osteopath clinics, as these uses all fall into the same medical use. We also looked at offices of a similar size to this surgery for comparison. Medical uses tend to attract rents in excess of office properties of similar sizes and locations, so having a bank of office properties to test this theory, whilst also comparing the property to other dental surgeries helped to ensure we had as much evidence as possible for negotiation of the review. We calculated the market rent to be £15/sqft, or £25,500 per annum.

The final stage of the instruction was negotiating with the tenant. They were strongly against an increase in rent, however our collection of evidence showed the market rent for the property had increased since the lease was granted. After analysis of some of the comparable transactions with the tenant’s surveyor, a rent of £14.80/sqft or £25,000 per annum was agreed, an uplift of £2,500 per annum for our client.

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