Renting commercial property can be complicated, especially when it comes to service charges and rent reviews. Here are 7 common problems and misunderstandings that frequently arise in this area, together with some clarification of your rights as a tenant.
1. I cannot challenge the increase in rent that the landlord has imposed.
It all depends upon the terms of the lease. The landlord's ability to change or 'review' the rent is a very important part of the lease. It requires careful consideration when the lease is being drafted.
2. I am negotiating a new rent with my landlord. The rent is likely to increase as the landlord has insisted that the rent is assessed as if the lease were for 10 years even though the unexpired term is only 5 years.
Rent review is a very complex area and whether or not the landlord is permitted to do this will depend on the terms of the lease. The terms of the rent review clause need to be considered carefully both when you are negotiating the initial lease and when the rent is being reviewed.
3. According to the rent review clause in our lease, our landlord can serve a notice laying out a new rent. Unless I object to this rent within a specified period of time, the landlord is entitled to enforce this rent regardless of how high it is.
Yes, he might be able to! Rent review is a very complex area and whether or not the landlord is permitted to do this will depend on the terms of the lease. The terms of the rent review clause need to be considered carefully both when you are negotiating the initial lease and when the rent is being reviewed.
4. My landlord should have exercised his right to review the rent 18 months ago, but as rents were depressed then, he has waited until now when they have risen. He is now proposing to increase the rent and backdate it to last year.
The terms of the lease will dictate whether or not the landlord is able to do this. Often leases will allow the landlord to increase the rent even after the specified day. The lease should provide that whenever the rent is reviewed it is always reviewed as at the stated rent review date. This is to avoid situations where landlords wait for the market to improve before starting the review. We can advise on all aspects of rent review and protect your interest when the lease is being negotiated.
5. I cannot challenge the alteration to the service charge contribution that the landlord has imposed.
The terms of the lease will dictate this.
6. I pay a service charge. I am unhappy as to the amount the landlord claims he is spending. However, I am obliged to contribute to this via the service charge.
Service charges are a very complex part of the lease and need careful consideration when the lease is being negotiated. However, a Code of Conduct for Service Charges does exist that might give you extra rights above those specified in the lease.
7. I pay a service charge and the landlord has provided certified accounts detailing expenditure over the last year. I have been told that this cannot be challenged.
Your lease should cover such issues. The Code of Conduct for Service Charges may also provide some protection.
Commercial leases can often be long and complicated. Agreeing to the wrong terms in the original lease, or failing to understand the meaning of your rights under that lease subsequently, can be very expensive. To avoid losing out, make sure you get the advice of an experienced commercial property solicitor both on the drafting of the original lease and on any subsequent interpretation. An experienced solicitor can in particular help to protect your interests in the negotiation of the original lease.
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