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How to avoid a rent review disaster?

24 03 20 blog LL

Read the lease.


I often get asked for tips on how to manage a rent review to achieve the best outcome and my answer usually starts and finishes with the advice; read the lease.

Rent review disasters include having to pay an unbudgeted rent increase, an over-rented lease that cannot be disposed of, or an under-rented lease that deflates the freehold value. How can you avoid this?

Of course, you should appoint a rent review consultant. That consultant should be experienced in the sector in which you operate; there is no point in appointing a surveyor who specialises in factories in the Midlands to negotiate your rent review on a pub in Soho.

That consultant should also work in a business that undertakes letting transactions in your sector - they need an up to date understanding of what is going on in the market in order to properly advise on market value.

If your business operates over a broad geographical region, then that consultant should also be able to draw on regional expertise as well.

But what about the more technical details?

  • What is the rent review valuation date? It’s in the lease.
  • Should tenant’s improvements be disregarded? Usually, but it depends upon what your lease says.
  • Are there onerous lease terms that should reflected in the rent agreed? Read the lease.
  • What hypothetical lease terms should be assumed? You guessed it.
  • How is a dispute resolved? Usually by either an arbitrator or an independent expert, it’s in the lease.
  • Can I challenge the outcome? Sometimes, but what does the lease say?
Planning is important as well. Start early; develop a strategy and budget properly including making appropriate provisions for back dated increases, plus interest. Didn’t know that interest was payable? It’s in the lease.

Having specialised in this field for 35 years, I have witnessed  most things that can go right or wrong in a rent review negotiation, and they haven't always been my fault. However, I am sure that in almost every case that a disaster has occurred, it could have been averted by following this advice - read the lease.

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Nigel Ball

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A senior real estate professional with 30 years’ experience in the lease advisory field. Prior to joing Colliers in April 2018, I worked for 12 years at BNP Paribas Real Estate, where I led the lease advisory business line, launched its licensed leisure team and was a Trustee of the pension fund.

I am an expert in the licensed & leisure market, focussed on delivering property cost reduction and value added solutions for pub and restaurant businesses, as well as advising investors with holdings in the wider leisure sector, including health & fitness, cinema, bowling and other leisure uses.

I have extensive experience of Central London pub, bar, nightclub and restaurant rent review disputes, acting either as expert witness or as Arbitrator.

I am appointed to the RICS President's panel of dispute resolvers, qualified to act as an arbitrator in pub and restaurant disputes in London and the South-East.

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