RENT REVIEWS

We offer a full rent review service from initial valuation and strategy advice, through to the negotiations and, if necessary, making representations to third surveyors where a negotiated settlement is not possible.

Initial Valuation and Strategy Report

We often suggest that, as a first step in any rent review instruction, a rental valuation and strategy report is prepared.

In compiling our report we will have full regard to the terms of the lease together with any relevant licences, such as Deeds of Variation or Licences for Alterations and Improvements.

We also consider the state of the market. For example in a rising market it may advantage a landlord to delay the service of the rent review Notice and conversely in such circumstances it may be appropriate to recommend that the tenant expedite the review as permitted by the lease.

We will also have regard to the terms of the lease and particularly advise on any time implications in serving the rent review Notice and responding to it.

Negotiations

We have a wealth of comparable evidence at our disposal, both "in house" and through external database sources. This ensures that we have up to date rental evidence at our disposal so that we negotiate from a position of strength.

The tactics employed during the negotiations depend upon our opponent, their skills and credentials. In some instances a "softly, softly approach" may work more efficiently with an unrepresented party, whereas in other cases it may be necessary to be particularly adversarial to obtain the best result for our client.

Where appropriate we will recommend making an application for the appointment of an Independent Expert or Arbitrator as provided for by the lease, where such an appointment will benefit the negotiations or establish an appropriate timetable to meet the client's requirements.

Dispute Resolution

We have wide experience of making representations to both Arbitrators and Independent Experts where negotiated settlements are not possible. We explain to clients the implications of such representations including the likely outcome and cost implications.

In making representations we have regard to the requirements of the Royal Institution of Chartered Surveyors, as set out in "Surveyors Acting As Expert Witnesses: Practice Statement".

Where the lease allows the landlord to decide whether the third surveyor should act as an Independent Expert or Arbitrator we can advise and make a recommendation on the nature of the appointment.

Our service includes making representations to the Arbitrator or Independent Expert on costs following the issue of any interim determination on rent.

Conclusion

Once a rent review has been concluded we are able to prepare a suitable Rent Review Memorandum to formally record the settlement if required. We can also provide advice on the interest to be paid on back rent if necessary.

LEASE RENEWALS

We offer a full lease renewal service from initial valuation and strategy advice, through to the negotiations and if necessary making representations to third surveyors where a negotiated settlement is not possible.

Initial Valuation and Strategy

Our initial valuation and strategy report should be carried out before any formal Notices are served, whether you are a landlord or a tenant.

In compiling our report we will have full regard to the terms of the lease together with any relevant licences, such as Deeds of Variation or Licences for Alterations and Improvements.

Landlord

From a landlord's point of view you may find that the rent you are receiving is in excess of the current open market rental value of the property, in which event it would be better to allow the tenant to continue holding over at the increased level of rent, rather than terminating the lease and initiating the process by which the lease will be renewed at a potentially lower open market rent.

As a landlord you need to clearly state in your Notice terminating the lease whether you will oppose renewal or not. You cannot change your mind once the Notice is served and therefore this step needs to be very carefully considered. If the tenant is satisfactory and you have no redevelopment plans for the property then you may be prepared not to oppose renewal. If however you have an unsatisfactory tenant, or alternatively you require possession, perhaps for redevelopment, your own occupation or some other purpose, then consideration should be given to opposing renewal. However such a step in some circumstances will lead to compensation for the tenant and in all cases it will be necessary to prove the grounds for possession to the satisfaction of the court should the tenant resist.

The landlord's Notice may be given not more than 12 months, nor less than 6 months, before the lease end date in order to terminate the tenancy on the contractual lease expiry. It is therefore important to give due consideration to your objectives at least 15 months and, ideally, 21 months prior to the lease expiry date. Although action need not be taken at this early time it does allow for a strategy to be formulated and any necessary steps put in place.

Tenant

From the tenant's point of view he can serve a Section 26 Notice under the Landlord and Tenant Act terminating the tenancy. It may be appropriate to do this where the landlord has not served a Section 25 Notice where rents have fallen and there is an advantage to the tenant in terminating the tenancy as soon as possible and assessing the rent to market levels. Similarly, in a rising market there is again an advantage to the tenant in bringing the tenancy to an end at the earliest point in order to set at a rent at the earliest opportunity.

Terms

At lease renewal there is an opportunity to potentially negotiate not just the rent, but all the terms of the lease. That said the courts will primarily grant a lease broadly based on the expiring lease and if there are substantial unagreed changes to the terms then there is likely to be compensation to the affected party.

Over the last 10 years or so there has been an increasing tendency for leases to be granted outside the security provisions given by Sections 24-28 inclusive of the Landlord and Tenant Act, 1954. In essence the landlord holds the upper hand in a strong market where the tenant has no right to remain in occupation after the contractual lease end date. In these circumstances a tenant, particularly, needs to consider his options early, so that he is not negotiating at a considerable disadvantage with his landlord at the lease end date. If the landlord is going to require unreasonable terms, unacceptable to the tenant, then the tenant will have no option but to accept or vacate. If the latter, this has to be planned for.

Negotiations

We have a wealth of comparable evidence at our disposal, both in house and through external database sources. This ensures that we have up to date evidence at our disposal so that we negotiate from a position of strength.

The tactics employed during the negotiations depend upon our opponent, their skills and credentials. In some instances a "softly, softly approach" may work more efficiently with an unrepresented party, whereas in other cases it may be necessary to be particularly adversarial to obtain the best deal for our client.

Representations

As part of our service we can prepare proofs of evidence both in writing and for oral presentation to the Courts in respect of lease renewals where a negotiated settlement is not possible. We can also make representations to the Courts on other matters such as interim rent.

Often the majority of terms are agreed at lease renewal and it is only the rent that is unresolved. In these circumstances it is often possible to refer the rent question to the decision of an Arbitrator or make use of the PACT service, which is often quicker and more cost effective than the courts. However such a step requires the agreement of both parties and whereas it often suits one party to deal with it this way, it may not suit the other.

OTHER SERVICES

In addition to rent review and lease renewal services we can offer other advice, including the following:

• Advice on the interpretation and application of lease provisions
• Interpretation and application of service charge provisions
• Surrender and renewal negotiations
• Advice on debt recovery to pursue outstanding rents and service charges including the options available to landlords
• Dispute resolution between landlords and tenants
• Dilapidations advice in conjunction with our Building Consultancy Division

Contacts - Chris Hollins FRICS | Richard Magee FRICS