Most leases that are longer than three to five years have rent review provisions which enable the rent payable to be adjusted to the current market rent. Similarly, when a lease comes to an end the rent will usually be set to the market rent at the renewal date.
We are experts in dealing with rent reviews and lease renewals throughout the Greater Manchester region resulting in a satisfactory outcome for both Landlords and Tenants.
Most reviews are to ‘market rent’ although the lease often defines hypothetical circumstances including vacant possession, good repair, full lease term etc.
A property is compared with others which are similar and have been let on the open market recently. In practice, no two properties are identical. Adjustments have to be made for location, size, layout of accommodation, condition, use, rent review pattern, tenants improvements and many other variables.
The landlord and tenant most commonly appoint valuers to value the premises taking into account all of the variables and market information. The valuers negotiate the market rent by analysing and testing each others evidence and assumptions.
Failing agreement, this may be referred to a third party, the valuers make submissions as to rental value followed by counter submissions with arguments against the other party’s submission.
It is important to appoint a valuer as early in the process as possible to carry out the necessary preparation and research. Correct measurement of floor areas in accordance with the Code of Measurement Practice is essential. Tenants’ improvements have to be identified and the lease read in detail to ascertain any restrictions which may reduce the value.
The review/lease renewal procedure has to be carefully considered to formulate a strategy. Knowledge of the local letting market is essential and comparable transactions have to be researched in detail.