Call me back
Rent Reviews – Advice for Landlords
Being a commercial property landlord usually involves significant financial cost and degree of risk. As such, achieving the right rent for your investment and ensuring that owning commercial property is both equitable and profitable is high on the agenda for the majority of landlords.
The past few years have seen increasing demand across many types of commercial property in Lancashire, and now we have greater political stability and an end date in sight for the completion of the Brexit process, many landlords may consider that this year is a good time to review the rent on their commercial properties.
Here are the factors landlords will need to consider.
Commercial property leases can run from a few months to years. As a landlord who wants to keep a lease profitable, you need to make sure the rent can be increased as and when it’s appropriate. To this end, it is necessary to include sufficient clauses in the lease to allow this to happen. It is advisable for longer leases (of 5 years or more) to have provision to allow for the rent to be reviewed part way through the term. For shorter leases, the rent will usually be reviewed at the end of the term.
The type of rent review
The terms of a lease should stipulate how the rent is to be re-valued. The most common type of review is an Open Market Rent Review, which looks at the rental income that could be achievable on the open market.
This is where our expertise comes into play as RICS Registered Valuers working throughout the commercial sector in Lancashire and Cumbria. We act on behalf of landlords to assess the open market and provide a rental recommendation, preparing a report to support our findings.
As well as working with landlords to undertake rent review where a tenant is in-situ, we often work with landlords throughout the rental cycle – carrying out an initial rental assessment/valuation to provide a suggested level of rent and helping to negotiate this on their behalf.
We would normally advise a Landlord to begin to consider the renewal of a lease 6 – 18 months prior to its end date. This will allow enough time to take the correct action in order to protect their position and also to ensure that the appropriate Notices are served within the required timescales.
After a landlord serves notice on the tenant for the new rent, it is possible for the tenant to raise a dispute, so long as they act by the deadline set out in the notice. This is where all of the factors above come into play; particularly in relation to seeking advice from a RICS Registered Valuer and following correct procedure as dictated by the original lease.
Lea Hough work with both landlords and tenants in Lancashire on a daily basis, we have a particularly good overview of the commercial property market at any one time, enabling us to provide informed advice to landlords. This often helps landlords to secure the best rental potential for a property. Please contact us for more information on rent reviews and lease renewals.
With a strong practical understanding of Landlord & Tenant law, Lea Hough can also advise on a variety of other related matters, such as Lease Surrenders, Break Clause Advice, Dilapidations and Lease Restructuring.BACK TO NEWS