Rent Reviews & Lease Renewals

Most leases of commercial and industrial property provide for rent reviews, usually every 5 years but on occasion this can be every 3 years. We act on behalf of Landlords or Tenants in negotiating the best possible deal on rent at review.

To ensure that we achieve the best outcome for our clients we provide a comprehensive package, the key components of this are:

• Analysis of your lease to ensure formal notices are served in the correct manner and at the correct time
• Full inspection of your property and analysis of comparable market transactions
• Negotiations with the other party
• Recommendations made on whether to settle or to seek third party proceedings
• The issue of Calderbank letters when appropriate to protect & limit ongoing arbitration costs
• Production of expert witness reports for third party proceedings
• Facilitating the completion of the Rent Review Memoranda documenting revised rent.

We act on behalf of Landlords and Tenants with respect to lease renewals of commercial and industrial property.

These negotiations differ from rent reviews in that all the main terms of the lease can be reviewed, not just the rent. Unlike rent reviews, which are generally upward only, rents can go down at lease renewal as well as up and this is why the specialist advice we offer can be of such value to you.

Our services at renewal (for either party) include:

• Initial lease evaluation to establish whether the tenancy is protected under the Landlord & Tenant Act
• Planning and execution of statutory notices in conjunction with your legal representation
• Full inspection of your property and analysis of comparable market transactions
• Negotiations with the Landlord/Tenant
• Recommendations as to the best course of action, i.e. settle or seek court proceedings
• Expert witness reports and representation in court - if required
• Liaising with your legal representation over the content and terms of the new lease.

A Lease Regear replaces one lease with a new one on renegotiated terms. Rather than a lease renewal, which happens when a lease has expired or is just about to expire, a lease regear will normally be proposed when there is some time before the lease expires, e.g. 3 years before the expiry date. 

The Landlord or Tenant are free to propose terms for a new lease at any time, this may become more attractive as the commercial goals of either Landlord or Tenant change over time.

Mutual gain is at the heart of any lease re-gear or restructuring, with neither party obliged to conclude a transaction, therefore a considered approach is needed.

Advantages for a Landlord include:

• enhancing the capital value of the property. This can be achieved a number of ways, for example by the removal of tenant break options
• pre-emptive regearing of leases close to expiry may preserve investment value particularly in anticipation of a sale or financing
• securing occupier levels will mitigate costly service charge and rates voids

The advantages for a tenant include:

• the opportunity to revisit lease terms which were agreed in a more buoyant market
• capital payments, rent free periods or reduced rents may be offered in return for extended lease terms or the removal of break options
• the opportunity to renegotiate every aspect of the lease including terms on assignment, subletting, rent review clauses and break dates

Once the terms are agreed there are typically two ways to complete the process – either by the issue of a new lease of by varying the existing lease.