Running a business already comes with a great deal of stress, which is compounded by rising rent prices on commercial leases.
As a tenant, you can feel powerless to prevent unfavourable rent reviews, especially with ‘upwards-only’ clauses putting you on the back foot. However, in most cases, there is room to negotiate.
In this article, we will guide you through the steps to successfully challenge an unfair rent review, while keeping your stress levels to a minimum.
What is a rent review?
A rent review is an assessment which often takes place every three to five years, where the value of the rental property is reassessed. This determines the rental payments that the tenant will have to pay going forward.
While rent reviews can often be negotiated, almost all commercial property reviews feature clauses that make them ‘upwards-only’. This means that the best-case scenario for the tenant after a rent review is to be paying the same amount as before.
With the power in the hands of the landlord and surveyor, rent reviews for commercial leases can leave business owners in a very difficult position.
How to challenge an unfair rent review
If you believe you have fallen victim to an unfair rent review, there are some steps you can take to challenge the rent increase. The first step you should take is to review the lease agreement for the property.
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Review the lease agreement
It’s always best to start by reviewing the lease agreement signed at the start of the tenancy. Here you will find the details about the frequency of rent reviews on the property and how the new rent price was calculated.
If your landlord has increased your rent without handing you a Section 13 notice, they can face legal consequences under the Housing Act 1988.
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Assess local rent prices
By assessing the changes in rent prices in the local area, you will get a better idea of whether your increase can be considered fair. This evidence can be used further down the line to strengthen your negotiations or legal challenges.
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Negotiate the rent review
If you have gathered credible evidence that the rent increase is out of line with local prices, you should open up negotiations with the landlord. This way, you may be able to settle on a fairer agreement without having to venture down the legal route.
While the landlord may agree to negotiations, they are under no obligation to change the rent price. This is where it may help to acquire the services of a legal professional.
Your landlord’s contact information should be present on the Section 48 notice served at the beginning of the tenancy.
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Arbitration
If you fail to reach a mutual agreement with your landlord, you may want to consider going through arbitration. This involves bringing in an independent expert to listen to the arguments of both parties to come to an out-of-court settlement.
While this can help you reach a definitive conclusion to the case, it isn’t cost-effective and can result in an even bigger financial loss.
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Tribunal
An alternative to bringing in an arbitrator is to go in front of a tribunal panel. This will be made up of two or three professionals, including solicitors or surveyors. The application process is free, but you must apply before the date of your rent increase.
This process will involve compiling as much evidence as you can, including local rent prices and repairs that your landlord is responsible for. Both you and the landlord will be given space to put forward your claims within the tribunal.
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Seek legal advice
Most importantly, you should seek advice from a legal professional prior to taking your case before a tribunal. A landlord and tenant solicitor will be able to assess the details of your case and carefully guide you through the legal procedures.
Enlisting the help of a solicitor will also prevent you from entering legal proceedings if your case isn’t strong enough, saving you stress and money.
Challenge an unfair rent review with Osbourne Pinner Solicitors
An unfair rent review on your commercial property lease can make running your business feel impossible, especially in tough financial times. However, we’re here to help. Contact Osbourne Pinner today for a 30-minute consultation, free of charge. Our commercial property solicitors will guide you through every step of the way, helping you to get a fair deal.
Feel free to get in touch via the form below, call 0203 983 5080 or email [email protected].
