18 Oct 18 by John Tyas
Whether a rent review clause makes ‘time of the essence’ is an important factor for both Landlords and Tenants to consider. Missing a time limit could see either party potentially facing disastrous consequences.
It is well established that time is not usually of the essence in relation to Rent Review clauses and it is not unusual for landlords to serve Rent Review notices well after the review date itself. However, this presumption can be rebutted by any contraindications, either in the express words of the lease or by the interrelationship of the Rent Review clause and other clauses in the lease.
One such circumstance can occur when a Tenant’s option to determine the lease falls on the same fate as the Rent Review. One of the deciding factors from a Tenant’s perspective as to whether they exercise a break option will be how much future rent they are likely to have to pay. If the Rent Review notice has not been served prior to the expiry of the break clause notice period, then the Tenants will not be able to take into consideration the extent of future rental liabilities in making their decision. It can therefore be deemed that even though the Rent Review clause may be silent as to whether time is of the essence, that its interrelationship with a break clause means that a Landlord must serve the Rent Review notice giving at least the same amount of notice that is required by the Tenant under the terms of the break clause. Failure to do so could result in a Landlord losing their potential to increase the rent until the next Rent Review date.
We operate an in-house terrier system and aim to contact clients up to a year in advance of a Rent Review date so these avenues can be explored at the earliest opportunity. Similarly, we recommend that if you are aware that your property has a review forthcoming, that professional advice is sought as soon as possible. Vickery Holman has a team of Rent Review Surveyors spread across the four offices and can assist in this regard.