Rent Reviews & responsibilities for commercial landlords

For Commercial tenants

Within Ringley we have Solicitors, Engineers, Negotiators and Property Managers so together we act as expert witness; prepare submissions for arbitration & can advise on statutory and tactical procedures.

Ringley’s expertise encompasses; rent reviews, dilapidations, lease renewal and sourcing tenants. The rest of this page provides useful advice for tenants.

The commercial Rent Review

A landlord may loose the right to call a rent review if he/she does not call it when and how the lease says, so, as a tenant it may be in your interests to keep quiet.

Leases & rent reviews: what type of lease Is yours?

Does it

1. require the landlord to serve formal notice to call the rent review
2. say if the landlord fails to call the rent review they loose the opportunity to review the rent until the next review
3. let the landlord review the rent when they remember to call the review but not backdate any increased rent
4. let the landlord review the rent when they remember to call the review AND backdate any increased rent
5. say if the rent is not agreed by a certain date that the landlord must appoint an arbitrator or independent expert to set the rent

Making sense of all this is where Ringley Chartered Surveyors can help >>contact us>>

The End of a Commercial Lease / Lease Renewal

Commercial tenants need to be aware that when a commercial lease comes to an end there is only an automatic right to stay in the property if your landlord has not served a Section 25 Notice on you and if your tenancy is inside the 1954 Act. If your lease is protected then when it ends you will have the right to stay in the property and hold over on the same terms until new terms are agreed or either party applies to Court and the Court imposes a new lease.

What to do if you receive a Section 25 Notice

You must act if you receive a Section 25 Notice if you want to stay in the property. The correct response is to serve a Section 26 Notice requesting a new lease. And beware: if you fail to observe certain time limits you may loose the right to a new lease. Whilst for tenants protected by the 1954 Act the landlord’s grounds to seek possession are limited you may well finding yourself having to prove that the landlord’s grounds are unreasonable.

Ask Ringley law to help you make sense of this >>contact us>>

What happens at lease renewal?

When it comes to a lease renewal there are several types of lease

Is yours a lease that:

1. automatically ends your occupational rights as tenant on the last day of the lease
2. do you, the tenant automatic security of tenure and not need to serve notice to request a new lease
3. requires you, the tenant to serve notice to request a new lease, are you aware of the timescales
4. gives you, the tenant security of tenure whether or not you serve notice to request a new lease
5. requires you, the tenant to serve notice of your proposed terms to be able to backdate any new rent to when the lease ended
6. says if terms are not agreed by a certain date that you must apply to the Court for the Court to set the new terms

Ask Ringley law to help you make sense of this >>contact us>>

The Terminal Dilapidations Inspection

A terminal dilapidations schedule will be served by the landlord and may call for you to put the property back into the condition it was in when the lease started or to pay them a cash equivalent instead.

The best way to ensure you are not required to do more than is reasonable is to find the “schedule of condition” you ought to have had prepared by a Surveyor when you took the property on. A schedule of condition represents the true condition of the property at the outset and then creates the start point for negotiations to make sure you are not being asked to give something better back than you took.

The formula is:
condition of the property at the start of the lease
+ repairing duty set out in the lease______________
= condition that you have to give the property back in

The repairing duties will be set out in the lease and dilapidations called for arise where the condition of the building at the end of the lease falls below the schedule of condition day 1.

To be in the best position you need:

• have a schedule of condition to use a starting point, and to
• have a weak repairing clause that is not too onerous.

From these documents a Ringley Surveyor can interpret the landlord’s schedule to negotiate what really needs repair, and reject overly onerous repairs that go beyond the duty of the lease.

When it comes to understanding dilapidations there are several types of repairing obligations. Is yours a lease that requires the tenant to

1. put the building into repair
2. keep the building in repair
3. maintain the building in repair

and based on the actual condition of the building does repair mean:

• a patch repair
• renewing part of a building element (ie, patch repairs to the roof)
• renewing the whole of a building element (ie,, a new flat roof)

and then your Surveyor will need to know whether your preference is to

• do the repairs, before the end of the lease
• do the repairs, after the lease has ended
• pay you the cash cost of repairs and compensation for any rent you will lose because the repairs were not done until after the lease ended

It is worthwhile thinking about your repairing obligations set out in the lease and doing the redecoration you will probably be required to do at the beginning of the last 12 months of the term, ie, minimising the landlord’s chance to serve an onerous Dilapidations Schedule upon you.

Making sense of all this is where Ringley Chartered Surveyors can help >>contact us>>

For Residential Landlords

Within Ringley we have Solicitors, Engineers, Negotiators and Property Managers so together we find you tenants, deal with tenancy renewals, evictions, rent arrears and negotiating new rents.

Making sense of all this is where Ringley Chartered Surveyors can help >>contact us>>

Here are some tips as to what you need to diarise
For Assured Shorthold Tenancies (rent up to £25,999 per annum/£500 per week) we suggest you set up 3 flag dates:

• Interim tenancy inspection
• Section 21 Notice, to bring the tenancy to an end
• End of tenancy / tenancy renewal
• End of lease Inventory check out

For Assured Tenancies (rent up to £25,999 per annum/£500 per week) we suggest you set up 3 flag dates:

• Interim tenancy inspection
• End of tenancy / tenancy renewal
• End of lease Inventory check out

For Rent Act Protected Tenancies we suggest you set up 2 flag dates:

• Interim tenancy inspection
• Rent Review

For Residential Tenancies by Contract (rent over £25,999 per annum/£500 per week) we suggest you set up 3 flag dates:

• Interim tenancy inspection
• End of tenancy / tenancy renewal
• End of lease Inventory check out

An overview of the tenancy cycle

Table to show the different duty of an Arbitrator to an Independent Expert

Arbitrator

Must comply with formal statutory framework, laid down by Arbitration Act 1996, (in conjunction with the lease or contract).

Oral hearings are more common, and can be expensive.

The Arbitration Act 1996 allows parties the ability to control the process.

The decision is based on evidence/submissions to the arbitrator.

You cannot sue an Arbitrator for negligence.

There is some scope for re-opening the decision, if incorrect.

Arbitration is a private process, with a duty of confidentiality. In theory, you are not able to use another award as evidence, without the consent of parties. The Arbitrator will not attach much weight to such evidence.

Independant experts

Informal process (as opposed to legislative), the procedure derived is solely from the terms of the lease or contract.

Decisions are usually based documents submitted, so compared to Arbitration, may be cheaper.

It is the lease or contract that gives parties the opportunity to control the process.

An expert may use their own knowledge and expertise, to reach their decision.

You can sue an expert for negligence (in theory).

The decision is more likely to be final and binding, (even if incorrect).

In theory, you cannot use a determination as evidence in another process without the consent of parties. In any case, little weight tends to be attached.