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Jennifer Slade.  Rent  Rent review  Amount  Payment dates  Rent suspension/abatement  Payments defined as “Rent”  Interest.

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Presentation on theme: "Jennifer Slade.  Rent  Rent review  Amount  Payment dates  Rent suspension/abatement  Payments defined as “Rent”  Interest."— Presentation transcript:

1 Jennifer Slade

2  Rent  Rent review

3  Amount  Payment dates  Rent suspension/abatement  Payments defined as “Rent”  Interest

4  Purpose  Periodic reassessment of rent  Valuation exercise – determined by provisions ▪ Open Market Rental Value (OMRV) ▪ RPI ▪ Turnover rent  Upwards only rent review?

5 Rising market Falling market

6 Rising market Falling market Reviewed rent (upwards only)

7  Rent review provisions = directions to valuer  Use of “comparables”  “Hypothetical lease” is subject of valuation  Based on actual lease  Assumptions and Disregards introduced to ▪ Eliminate contingencies of actual letting ▪ Create “level playing field” ▪ Produce fair valuation?

8 Hypothetical letting: lease provisions

9 Take actual clause Widen (i.e. less restrictive)

10 Hypothetical letting: lease provisions Take actual clause Widen (i.e. less restrictive) Lease more attractive to hypothetical bidders More/higher hypothetical rental bids

11 Hypothetical letting: lease provisions Take actual clause Widen (i.e. less restrictive) Lease more attractive to hypothetical bidders More/higher hypothetical rental bids Rent inflated at review (landlords’ objective)

12 Hypothetical letting: circumstances

13 Take actual circumstances of letting/market Increase competition for hypothetical letting/adjust circumstances

14 Hypothetical letting: circumstances Take actual circumstances of letting/market Increase competition for hypothetical letting/adjust circumstances More/higher hypothetical rental bids Rent inflated at review (landlords’ objective)

15  (a) no works … that have diminished the rental value  (b) if destroyed… Premises rebuilt  (c) L and T covenants have been performed  Is this fair to T?

16  (d) willing landlord and willing tenant… with vacant possession  Is VP always realistic?  (e) fully fitted out

17  (f) Hypothetical Lease contains same terms as [actual] Lease save for Initial Rent… and… any rent-free period [for fitting out]  Rent-free’s and other inducements:  Broadgate Square v Lehman Brothers  “headline rent” vs “effective rent”

18 Take a five year lease – “rent” is £100K p.a

19 Rent-free of 12 months

20 Take a five year lease – “rent” is £100K p.a Rent-free of 12 months £0 £100K

21 Take a five year lease – “rent” is £100K p.a Rent-free of 12 months £0 £100K Headline rent = £100K p.a. BUT Effective rent = 400/5 = £80K p.a.

22  (f) (continued)… including provisions for rent review  (g) term of hypothetical lease  (h) (i) 1954 Act renewal / VAT recovery

23  See s34 LTA 1954  (a) occupation  (b) goodwill  (c) improvements

24  Experts vs arbitrators  Formalistic reviews  Time of the essence


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