As a commercial tenant in the UK with a lease, you regularly pay rent to your commercial landlord in return for your occupation and use of their property. However, the regular rent amount of commercial leases can change if you have a rent review clause in your lease agreement. If your lease is subject to a commercial rent review, you should understand what your landlord will base your rent review on, which will be in the rent review provisions. Doing so helps you prepare for the possible likelihood of a rental increase and allows you to understand and budget for your future costs. This article will explain to you, as a commercial tenant, the factors that will affect your rent review.<\/p>\n\n\n\n
A rent review is where your commercial landlord assesses the rental price you pay for the commercial space in their property. They do this to ensure they get the best rate for their property.<\/p>\n<\/div>\n\n\n\n
Your business premises can be subject to a rent review if you have a rent review clause in your commercial lease agreement<\/a>. A rent review clause will detail how often your lease may be subject to a rent review, typically every three to five years. It will generally detail:<\/p>\n\n\n\n Landlords generally use one of the following review methods:<\/p>\n\n\n\n Let us explore each of these.<\/p>\n\n\n\n Your landlord may base your rent review on the open market rental value. This refers to how much they should expect to receive in rent for the commercial space. So, they consider how much rent they can receive if they put their property on the rental market and lease to another business. <\/p>\n\n\n\n An open market assessment is an enquiry into:<\/p>\n <\/p>\n <\/p>\n<\/div>\n\n\n\n The property value of your landlord’s property is the current market value. So, in other words, your landlord assesses how much they would get for their property now if it were on the market for sale. They consider these through a surveyor and have to factor in some points regarding your commercial lease when they do so. These are:<\/p>\n\n\n\n Assumptions refer to a valuation of your landlord\u2019s property on the assumption that you have complied with your lease terms<\/a>, regardless of whether you have. Therefore, if there is an obligation in your lease for you to repair items in your commercial premises within a reasonable time when they break, the property value will assume you have done so even if you have not.<\/p>\n\n\n\n Disregards are factors regarding your lease that your landlord does not have to consider when assessing the property value. Therefore, if you redecorate the business premises, but your landlord does not require you to, they do not need to consider this when valuing the property.<\/p>\n\n\n\n Understanding the assumptions and disregards is essential as they directly affect the new rental calculation and may produce a higher value than expected.<\/p>\n<\/div>\n\n\n\n\n\n Continue reading this article below the form\n <\/i>\n<\/a>\n\n
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Open Market Rental Value <\/h2>\n\n\n\n
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