Rent review

Rent review

Purpose and approach to rent review

Provisions for periodical review of rent are often included in longer term leases to allow the rent to keep up with the changing rental values of property. In MFI Properties v BICC Group Pension Trust, Mr Justice Hoffmann (as he then was) said:

‘A rent review clause is designed to deal with a particular commercial problem, namely that of the tenant who wants security of tenure for a lengthy term, and the landlord who, in times of inflation or a rapidly changing property market, does not want to commit himself to a fixed rent for the whole of that term.’

Reviews are generally ‘upwards only’ (meaning the rent can rise, but not fall, at each review) but some older leases may still contain ‘upwards and downwards’ review provisions.

Methods of rent review or determination include:

•
Indexation—the rent is linked to a particular index, such as the Retail Prices Index or Consumer Prices Index
•
Turnover rent—based on the tenant’s business turnover at the premises; this type of arrangement is typically found in the retail

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