We predict that over 10% of Rent Reviews will have to go all the way to Expert or Arbitrated Determination and potentially more than 2% to Court by the end of 2018
If you have a Rent Review on the horizon, use our checklist below:
Make a file
Create a file, with a copy of the lease, any licences, deeds, memoranda, agreements/side letters relating to Tenants' improvements and Landlords' works, Schedule of Condition and any relevant images of the property.
Make sure you know the dates
Be aware of the date of valuation and any interest provisions that may apply.
Check if time is of the essence
Does the Rent Review need to be operated at a particular time? Do specific notices or counter notices need to be served? If time is of the essence, you could inadvertently agree to the Landlord's proposed rent simply by not adhering to the timescales set out in the lease.
The Landlord may propose a rent that is based on the headline rent being paid on a comparable building, but an Arbitrator will base his calculations on a like for like basis. Find all the relevant comparable evidence and build your case with it.
What does the clause say?
Don’t assume that the rent can only go up. A good Surveyor could have added an Upwards/Downwards clause in the original lease, so check what it says. The Rent Review clause dictates how the property should be valued at review. The assumptions and disregards have a big impact on value, so check for restrictions that will devalue the open market rent.
Talk to your Landlord
Build your evidence and put a supported argument to your Landlord. Arbitration is costly and time consuming and your Landlord will want to avoid it as much as you, so if you have a strong argument, he will be less confident of his position.
Know your position
When calculating what you consider to be an acceptable settlement figure, make sure your cost benefit analysis allows for interest and back rent. There is no point in holding out for an extra £1 rent reduction if it is going to cost you £2 in total costs.
Get expert advice
If your Landlord is not playing ball and wishes to refer the matter to a third party you will have to produce a detailed third party report. The more detailed and accurate the submission, the more likely the Expert or Arbitrator is to agree with it, both in his findings and in his award of costs. At this stage we recommend you seek professional advice and we at The Lorenz Consultancy are Specialists.
Get it signed
Once the Rent Review is settled, get the memorandum/addendum signed by all parties and add a copy to your file ready for your next Rent Review.