Open Market Rent Review
The most common type. Rent is reviewed to the open market rent — what a willing tenant would pay a willing landlord at arm's length at the review date. Usually upward-only, meaning the rent cannot fall below the passing rent.
Rent Review Solicitors
Expert legal advice for landlords and tenants on commercial rent reviews — upward-only clauses, open market valuations, arbitration, independent expert determination and counter-notices.
Commercial Rent Review Legal Services
Rent reviews are a standard feature of most commercial leases, typically occurring every three to five years. They give landlords the opportunity to increase (and in some leases, decrease) the rent to reflect current market conditions. The process is governed by the rent review clause in the lease, which varies considerably between properties and lease types. Getting the rent review right — or successfully challenging an unjustified increase — can have a significant financial impact over the remaining lease term.
Legal Merchant's panel of specialist landlord and tenant solicitors provides expert, commercially-minded advice to both landlords and tenants on all aspects of the rent review process throughout England and Wales.
Acting for Both Landlords and Tenants. Our solicitors act for landlords seeking to maximise review rents and for tenants resisting inflated increases. We provide objective, evidence-based advice to achieve the best possible outcome for our clients.
Types of Rent Review Clause
The type of rent review mechanism in your lease determines how the review is conducted and what evidence is relevant:
Index-Linked Review
Rent increases automatically in line with an index — most commonly the Retail Prices Index (RPI) or Consumer Prices Index (CPI). Simpler to operate but may produce results detached from actual market conditions.
Fixed-Increase Review
Rent steps up by a predetermined fixed amount or percentage at each review date. Certainty for both parties but may not reflect actual market movements over the long term.
Turnover-Based Review
Common in retail leases, particularly shopping centres. Rent is linked to the tenant's turnover, usually as a base rent plus a percentage of sales above a threshold.
The Rent Review Process
Step 1: Trigger and Notice
Most open market rent reviews are triggered by one party serving a notice on the other at or around the review date. Lease terms vary significantly — some leases require the landlord to trigger the review, others are automatic. Critically, many leases contain time of the essence provisions for trigger notices — missing a deadline can mean losing the right to review entirely. Our solicitors check your lease carefully and act promptly to protect your position.
Step 2: Negotiation
In most cases, landlord and tenant (usually through their surveyors) attempt to agree the new rent by negotiation. Our solicitors work alongside your surveyor to ensure the legal framework of the lease is correctly applied during negotiations — particularly assumptions and disregards that can significantly affect the valuation.
Key Assumptions and Disregards
Rent review clauses typically require the valuer to assume certain matters that may not reflect reality (for example, that the premises are vacant and to let, or that all tenant's covenants have been complied with) and to disregard others (for example, the tenant's goodwill, tenant's improvements, and the fact of the tenant's occupation). The precise wording of these provisions can dramatically affect the reviewed rent, and our solicitors ensure they are correctly applied.
Step 3: Third-Party Determination
If the parties cannot agree, most leases provide for the rent to be determined by a third party — either:
- Arbitration — a formal quasi-judicial process governed by the Arbitration Act 1996. The arbitrator hears submissions from both parties and makes a binding award. The arbitrator can award costs against either party.
- Independent Expert Determination — less formal than arbitration. The expert uses their own knowledge and may or may not invite submissions. The expert's decision is binding and there is no right of appeal on the merits, though it can be challenged if the expert has departed from their instructions.
Our solicitors prepare comprehensive written submissions for arbitration and expert determination, marshalling comparable evidence and legal arguments to support our client's position.
Common Rent Review Disputes
- Upward-only clauses — landlords claiming the reviewed rent must be at least the passing rent, even in a falling market
- Comparable evidence — disputes over which comparable lettings are most relevant and how adjustments should be made
- Tenant's improvements — whether particular works were truly improvements carried out by the tenant (which must be disregarded) or landlord's works
- Assumed lease terms — the effect of assuming a new lease on different terms from the actual lease
- Time bar provisions — whether a party has lost the right to review through failure to serve a timely counter-notice
- Memoranda of rent review — ensuring agreed rents are correctly recorded and enforceable against successors in title
Frequently Asked Questions
No. An open market rent review increases rent to the market rent — what a willing tenant would pay on the open market at the review date, on the assumptions and disregards in the lease. The landlord cannot simply demand any figure. If you cannot agree, the rent is determined by an independent expert or arbitrator using comparable market evidence. Upward-only provisions mean the rent cannot fall below the current passing rent, but the landlord must still justify any increase by reference to the market.
It depends on your lease. Many leases allow the landlord to trigger the review after the review date (and may even provide for the reviewed rent to be backdated to the review date). Some leases contain time-of-the-essence provisions that can result in the landlord losing the right to review altogether if notices are served late. You should instruct a solicitor to review your lease well in advance of any review date to ensure notices are served correctly and on time.
Most commercial leases require the valuer to disregard improvements carried out by the tenant during the current tenancy (or a previous tenancy if the tenant has remained in occupation). This prevents tenants from paying a higher rent on improvements they funded themselves. However, the disregard only applies where the tenant carried out the works in accordance with the lease — for example, with landlord's consent where required. Works carried out by the landlord, or which the tenant was obliged to carry out under the lease, are not disregarded.
Arbitration is a formal legal process governed by the Arbitration Act 1996. The arbitrator acts judicially, hears evidence from both parties, and can award costs. An arbitrator's award can be appealed to the courts on a point of law. Independent expert determination is less formal — the expert uses their own professional knowledge and experience, and their decision is binding (subject only to challenge if they depart from their instructions). Costs cannot generally be awarded against either party in expert determination. Which procedure applies depends on what your lease says.
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