Rent Review Notes

Rent Review Rent Review - Common Amendments What is the effect of the tenant's amendment (what does the tenant want?) Why does the tenant want the change? The tenant wants to change the review date from 1 July 2018 and penultimate day of the term to 1 July 2017 and every fifth anniversary To avoid the possibility of the landlord obtaining an increased rent during a period of holding over in the event that the lease continues under the Landlord and Tenant Act 1954. It may be more beneficial for the tenant to rely on the interim rent provisions in s.24A of the LTA 1954 as these may result in a more favourable review for the tenant. To bring the rent review date in line with the break clause in the lease. Then, if the rent review is too high and could get a better price elsewhere, can walk away without having to be tied into higher rent as would happen if rent review occurred after break clause. To amend the rent review from an 'upwards only' rent review to an either way rent review Creates the possibility of paying a lower rent if the open market review decreases. The amendment means that the tenant will not be assumed to have received any inducement such as a reverse premium or rent free period. This means that the tenant will not have to pay an artificially high 'headline' rent that is inflated due to any reverse premium's or rent free period that will consequently be spread across the lease. The tenant wants to remove the assumption that the premises may be used for any purpose within certain classes. The tenant would be paying a higher rent because of a less restrictive lease, but in reality would not actually have the benefit of that lease. The tenant is trying to remove the assumption that the tenant will not be disadvantaged by a hypothetical tenant's inability or decision to waive VAT. This assumption would enable to charge VAT which for certain tenants within the market would not be recoverable. The tenant wants to exempt works carried out pursuant to a statutory requirement that diminish the market value. The tenant will want this removed to reflect the reality of the situation. There will be exempt tenants not able to recover VAT in the market and these comparable should be taken into consideration when considering the new rent, and seek to avoid certain tenant's paying 20% more rent after the Landlord has opted to tax. This amendment will avoid the situation in which the tenant is not able to pay a lower rent even though the value may have been decreased through no fault of his own which may in fact effect his own enjoyment of the property. Should the landlord agree? Is there a compromise or some other way of meeting the tenant's concerns? The amendment as it is probably acceptable. Since 2004 this has lost its significance as even if the lease does contain a penultimate day review, the rent determined under it can, after one day, be replaced by the rent determined under an interim rent application by the tenant. The penultimate day review will only be of use to the landlord only if the tenant fails to make an interim rent application, which is unlikely. Unlikely. Upwards only rent review appears to be market practice. However, the 2007 code for Leasing Business provisions suggests an up/down review with a minimum on the initial rent, or reference to another measure such as annual indexation. This is a fair amendment. The lease also contains 'the best yearly rent.' On the basis of the Broadgate case, a headline rent may be payable even if the amendment is made. Courts will not 'lean against' a headline rent in the face of clear unambiguous language. Compromise = widen the user covenant within the actual lease to match the use specified in the assumption. Alternatively, make the assumed class the same as that under the lease. The current amendment appears to be fair. This is a fair amendment. The tenant may even seek to obtain a reduced rent on the basis that not only has the amendment reduced the market value, it is has reduced the actual tenant's own enjoyment of the property. 

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