To Review or Not to Review?
As Lady Day (25th March/6th April) fast approaches, Tenants must be considering whether to activate rent review notices served last year or serve for next year.
Ellie Allwood, Partner at JHWalter comments “When acting for either Landlord or Tenant, I would rather deal with rent increases rather than reductions as this means the industry is seeing improved profitability – rather than the current depressed conditions which, significantly, do not appear to be improving within the short/medium future”.
In some cases, rather than a formal reduction in rent, the parties can also agree rent abatements, or alternatively, the Landlord could invest in improvements or contribute towards the Tenant’s repair obligations; give formal consent for diversification/subletting, or discuss succession.
All such matters can be put into the context of the review discussions – but we still cannot ignore that the market conditions since the previous reviews have changed so significantly that inevitably the amount of rent paid must be looked at. Rents can go down as well as up – and if reduced this time, both Tenants and Landlords must hope that the rent increases in three years’ time – as this should mean that financial prospects have improved significantly from the current prices.
A rent review is always a good opportunity for the parties to talk – and listen! This way the parties can understand the issues and maintain a good landlord and tenant relationship.