NOTE: This page is for general information - Marshalls do not undertake rent review work, which is a specialist discipline.
Are you happy about the rent you pay on your business property? If not, read on, because if you're going to query it you need to do so
quickly and using the right channels. Otherwise you could be stuck with the
rent your landlord sets. Luckily help is at hand - a Chartered Surveyor,
with an intimate knowledge of the business property market, can advise and
possibly help you negotiate a fair rent - for both you and your landlord.
What are rent reviews?
Your lease will state when reviews happen - usually every three to five
years. It's designed to adjust the rent to the current market level at the
Can rents go down as well as up?
It depends on the lease. Some say the rent will remain the same or increase
(if market rents have increased) at the review date. This is called an
'upward only' rent review clause. Other leases will let the rent to go
either up or down, depending on market rents at the time.
Are rent reviews the same in all leases?
No. Most leases should reflect your particular the needs. If you're not sure
about the rent review clauses in your lease speak to your chartered surveyor
How do rent reviews work?
First the landlord gives you written notice that the review is about to
happen. A specific figure will be quoted for the new rent. If this does not
seem reasonable, you must write and say so immediately. If you miss the
deadline for saying so you'll have to pay what the landlord is asking.
What happens if I don't agree with the new rent?
Speak to your chartered surveyor or solicitor about negotiating directly
with your landlord to agree a new rent. Above all don't ignore the problem -
it doesn't go away. If you're still not happy check your lease. It should
set out the procedure for resolving the disagreement. Normally, it will say
that you and your landlord need to appoint an independent third party (a
chartered surveyor specialising in valuation) to decide the new rent. If you
cannot agree who that should be, the lease usually states that the president
of RICS (The Royal Institution of Chartered Surveyors) will choose someone
for you. Remember, just because a third person is involved doesn't stop you
trying to settle directly with your landlord. Depending on what it says in
your lease the independent third person may act either as: An 'arbitrator' -
although similar to a judge, the arbitrator's process is less formal than a
court. They still hear evidence from each party and reach a decision called
an 'award'. Or An 'independent expert' - they too may receive evidence and
listen to arguments, but unlike the arbitrator they can make their own
investigations to work out the suitable rent and reach a 'determination'.
Using an independent third party is a fair, final, informal, relatively
quick and best of all cheap way of settling disputes about rent, without
having to go to court.
How is the new rent fixed?
The third person assesses your rent by looking at rents agreed on the
letting, rent review or lease renewal of similar properties let on similar
terms at roughly the same date. But remember that, if the rent review is
upward only, your rent will adjust to the open market rental value, only if
this is higher than your current rent. The decision - an arbitrator's
'award' or independent expert's 'determination' - is usually given after
their fees have been paid.
Who pays for the arbitrator or independent expert?
The arbitrator or independent expert will ask you and your landlord to agree
to their fees first. You can negotiate the fee, but the arbitrator or
independent expert has a duty to proceed even if agreement has not been
reached. In the case of the independent expert, both parties pay an equal
share, unless the lease says otherwise. In arbitration, the arbitrator has
complete freedom to decide who pays what. If you or your landlord feels the
fees are too high, you can challenge them in court after the rent review has
Do the landlord and I need to be professionally
represented during these proceedings?
Not necessarily, the proceedings are fairly informal. However, expert advice
is essential, both in interpreting the precise terms of the lease (which
will have an effect on your rent) and in getting information on other
premises that may influence the level of rent. Landlords are very often
advised by chartered surveyors and may be expert in property matters
themselves. The RICS Contact Centre can give you names of local specialist
chartered surveyors. Presenting a case to an arbitrator without professional
help can be risky. As well as presenting specific evidence of similar local
rent levels your surveyor can also give an opinion as an 'expert witness',
based on professional knowledge and judgment. Where disputes are referred to
independent experts, presenting a case may be less important because they
have to make their own investigations and use their own knowledge.
Nevertheless, it is still risky to present a case without professional help.
When does the new rent become effective?
Once the award or determination has been given, you will need to pay any
increase in the rent immediately, back dated from the rent review date, even
if that date has passed. Often, leases will state that you need to pay
interest on the increase from the review date until the date of payment.
Is an award or determination final?
Essentially, an arbitrator's award is final and binding, though in rare
cases involving points of law or misconduct by the arbitrator the High Court
has the power to set it aside. There is no right of appeal against an
independent expert's determination. However, if you can show that the award
or determination has been negligent, it may be possible to sue for
compensation by way of damages.
Are there alternative/cheaper ways to settle a rent
Yes. You can always refer the dispute to a mediator. This could produce a
quicker and cheaper solution, although the mediator would have no authority
to impose a rent upon either of the parties.