Commercial Property Rent Reviews
Best Practices for Commercial Property Landlords and Tenants
Commercial rent reviews are a critical part of any lease, but they’re also one of the most common sources of dispute. Whether you’re a landlord seeking to maximise income or a tenant trying to protect business viability, understanding how to approach a rent review properly can save time, cost, and unnecessary conflict.
What is a Rent Review?
Most commercial leases in the UK include periodic rent reviews, often every 3 to 5 years, where the rent is adjusted to reflect current market conditions. These are usually upward-only, meaning rent can increase but not decrease, depending on the lease terms.
The key principle is simple:
What rent would the property achieve in the open market at the review date?
In practice, however, this is where disagreements begin.
A Real Case from Bethnal Green
A recent case we handled at Samson Consultants highlights how things can go wrong and how they can be resolved properly.
A landlord in the Bethnal Green area sought to increase the rent by approximately 33%, relying on high-value comparables from prime main road locations. However, the subject property was a secondary retail unit, located off the main road with significantly less footfall and visibility.
The tenant challenged this increase and instructed Samson Consultants to act on their behalf.
We prepared a detailed Report, focusing on:
• True like-for-like comparables
• Location adjustments (main road vs secondary position)
• Proper ITZA analysis (zoning method for retail valuation)
• Market evidence within a realistic catchment area
The matter proceeded to Arbitration, where an RICS appointed Arbitrator reviewed both parties’ evidence.
Outcome: The Arbitrator ruled in favour of the tenant stating that the market rent for the property on the rent review date was actually lower than the current rent.
This case clearly demonstrates that overly aggressive rent review positions, especially those based on inappropriate comparables are unlikely to succeed when properly challenged.
Best Practices for Landlords
Landlords often assume rent reviews are an opportunity to push rents to the highest possible level. That approach can backfire.
1. Use Relevant Comparables: Main road rents cannot simply be applied to secondary or tertiary locations without proper adjustment.
2. Avoid Overreaching: Unrealistic increases can lead to disputes, delays, and arbitration costs, often outweighing any potential gain.
3. Provide Proper Evidence: Support your position with:
• Verified transactions
• Lease details
• Floor areas and zoning
4. Think Commercially: A sustainable tenant paying a fair rent is often more valuable than forcing a dispute.
Best Practices for Tenants
Tenants should not assume rent increases are inevitable or justified.
1. Challenge the Evidence: Ask:
• Are the comparables genuinely similar?
• Is the location comparable?
• Are incentives (rent-free periods) accounted for?
2. Understand the Lease: Rent review clauses often contain assumptions and disregards that can significantly affect value.
3. Instruct a Specialist Early: A Chartered Surveyor experienced in rent reviews can:
• Analyse evidence properly
• Identify weaknesses in the landlord’s case
• Negotiate or represent you in third-party proceedings
4. Don’t Be Intimidated by High Opening Positions: As the Bethnal Green case shows, initial landlord proposals can be significantly higher than the true market rent.
Final Thoughts
Rent reviews are not about what either party wants, they are about what the market supports.
The Bethnal Green case is a strong reminder that:
• Evidence matters
• Location matters
• And expert representation can materially change the outcome
For both landlords and tenants, the best approach is always the same:
Be realistic, be evidence-led, and seek professional advice early.
M Raza Khan MRICS