02 Oct 20 by Lesley Anderson
A Rent review allows for the periodical adjustment of commercial rents to the market level applicable at the date of review and these take place at the intervals agreed in the terms of the commercial lease signed by both tenant and landlord. To establish what a fair market rent is, requires detailed knowledge of both the commercial property market nationally as well as locally. We are well placed to assist with rent reviews as we have an experienced team across the South West and we work right across the commercial property market, dealing with everything from valuations to sales to business rates consultancy.
Vickery Holman was recently asked to assist in a complex rent review when an Exeter-based property was held under two leases. Market comparisons were difficult to obtain which made negotiations more complex.. In these situations, using lease consultants was crucial to understanding the legal implications of the lease and in achieving a successful outcome for the tenants.
BOC’s showroom on Marsh Barton, Exeter is a good example of the complexity rent reviews in leases can cause. The property is a building with a yard but held under two leases, both including the right to review the rent from 29 September 2018. The landlord tried to increase the total rent for both from £25,100 to £34,500 per annum, presenting a significant increase for BOC that we helped resist.
A proper legal understanding of the leases proved a vital part of the dispute. The leases were complex including restrictions on the assumed use to be valued. As separate leases, each rent review had to ignore the other leading to some interesting problems. For example, valuing the building with the yard occupied by someone else meant the building had no loading access.
The property is also very different from other properties on Marsh Barton making it almost impossible to find rental agreements to compare it to. The landlord’s attempt to follow the top of the market showroom rents had to be blocked. Fortunately, our detailed market knowledge of Exeter meant we were aware of the rent for similar properties which were available at a much lower rent.
Our combination of expert legal knowledge and market awareness reduced the rent increase to only £28,250 per annum, saving BOC over £30,000 in the period until the next rent review.
Vickery Holman has assisted many tenants over the years with leases, rent reviews and where there is a dispute between a tenant and landlord. To find out more about our lease advisory services, please read more HERE