Rent Review in Commercial Leases - Drafting Tips & Traps

Introduction

Rent review provisions may seem a dry subject but are a key clause in any commercial lease for any landlord seeking investment return. Any failure to draft the rent review clause correctly can lead to claims against solicitors. The devil is in the detail and practitioners need to be aware of the effect of unusual physical features, rights or easements.

New emphasis on EPCs and 'Green Lease' clauses may also mean disputes about 'rentalisation' of improvements carried out by the tenant at their own cost where these works are not disregarded in the standard market value clause.

For a tenant the rent may well be the most significant outgoing for their business so the level of potential increases are of vital importance.

Following the COVID pandemic turnover rents have become popular in some situations, but these can be tricky to get right. Again, detailed understanding of the client's business is needed to ensure that the rent is appropriate. Turnover is not the same as profit. Returns, theft, franchises, and so on can lead to complex definitions.

Indexed rents may become more popular when the UORR ban is introduced. However, maths is not a strong point for many solicitors and errors in the drafting of Indexed rent reviews have led to much litigation. This course will explain the types of rent review and look at drafting tips and traps on each.

What You Will Learn

This live and interactive session will cover the following:

• Types of rent review - overview
• Indexed /RPI/CPI - drafting tips and traps. Weapons of Math Destruction - errors in indexation
• Turnover Rents. Key points to watch out for and how to work with the client and their surveyor or accountants to result in a workable outcome
• RICS market value
• The essential concepts of 'assumptions and disregards' and their impact on practical situations - improvements, breaches of covenant, determination by experts, etc.

Recording of live sessions: Soon after the Learn Live session has taken place you will be able to go back and access the recording - should you wish to revisit the material discussed.