Commercial leases will often contain provisions for a review of the annual rent at specified intervals during the term of the lease. The methodology and procedure for reviewing the rent are outlined in the lease and typically the process involves the parties’ representatives putting forward their respective valuations and supporting market evidence in support of their respective cases and negotiating a settlement.
Where agreement cannot be reached, there will normally be provision for referral of the commercial rent review to a third party surveyor who will act as an arbitrator or an independent expert.
Detailed knowledge of the local market and rental values as well as an in depth understanding of lease terms, statutory provisions and case law is critical in achieving the best result at rent review.
The correct interpretation of the commercial rent review clause is also fundamental not only to achieving the appropriate result at review, but also to ensure in some cases that the right to review the rent or to dispute a revised rent proposal is not lost.
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