Landlord and Tenant (submission)

Question 1

Tell me about the rent review process.

Answer 1

Receive instruction to undertake rent review
Competence, Independence, Terms of Engagement - scope of work, fee basis,
Discussed the client’s objectives
Read the lease - particular regard to rent review provision and any other factors that may affect value
Inspection and measurement
Submit recommendation client and receive instructions
Trigger rent review
Negotiation
Feedback from client
Agreement
Rent review memorandum
Get fee.

Question 2

What are the lease terms that affect value in a rent review?

Answer 2

Rent review clause - hypothetical term, assumptions and disregards
Repairing clause, user clause, alienation clause - how these compare to comparable/market standard

Question 3

How did you prioritise the evidence in your rent review example?

Answer 3

There is a hierarchy of evidence in the Handbook of Rent Review (Reynolds & Bernstein) 
OML
Lease renewals
Rent review - IE
Rent review - Arbitrator
Court determinations under L&T1954
Hearsay evidence
Sale & Leasebacks
Surrender & Renewals

Question 4

What is the difference between opinion of rent at rent review and market rent in a valuation?

Answer 4

Market rent basis is as stated in the red book global. The rent at rent review is determined by the assumptions and disregards in the lease.

Question 5

Have you ever been part of rent review negotiations that have gone to third party?

Answer 5

No, but I have got to the stage where an independent expert was appointed via the RICS Dispute Resolution Service.

Question 6

What would happen if they did?

Answer 6

Application made to the RICS Dispute Resolution Service (£425)
IE or Arbitrator usually determined in the lease
Both parties submit case to third party

Question 7

What are the usual assumptions and disregards?

Answer 7

Assumptions: no breaches of covenants, the property is fit for immediate occupation and use, the property is allowed to be used under its current use, available to let on the open market
Disregards: goodwill brought about by tenant’s occupation, goodwill attached to the property, any tenant improvements assuming consent granted.

Question 8

Was time of the essence?

Answer 8

No, time is not normally of the essence, determined by case law United Scientific Holding v Burnley Borough Council.

Question 9

Kingston Park - what was the fee basis?

Answer 9

???? - flat fee + % of T starting point, % of difference of reduction - started at £38k, got it to £30k

Question 10

Kingston Park - what were clients objectives?

Answer 10

Client wanted to minimise rental uplift + try and openly negotiate without 3rd party costs - the review had been prompted by landlord, who had been in process of negotiating with other 3 occupiers to enter into reversionary leases with the aim of selling the investment. The landlord had recently changed their objectives, and is now looking to settle the rent reviews, and on that basis recommence agreeing reversionary leases/lease renewals. Greggs was the first unit to focus on, therefore landlord was looking to increase rent as much as possible to provide evidence for other 3 occupiers reviews.

Question 11

Kingston Park - what documentation did you request/check?

Answer 11

Existing lease:
Checked not contracted out
Checked it was signed
Checked whether time of essence - wasn’t, but if was, the RR date had already passed, therefore would have advised client to not proceed, as not exercisable.
Lease plan
Checked with client no licences, or deeds/variation in lease existed.
Rent review trigger - lease was silent, therefore assumed Landlord had right to trigger (which he had).
Tenant received trigger notice from landlord - we were then subsequently appointed

Question 12

Kingston Park - summary of lease terms (excl. RR clause)?

Answer 12

Passing rent: £20,000 p.a.
10 years
Year 5 review
Repairs: to keep in repair FRI, analysis of comparable transaction leases were on same basis - not wider than usual repairing clause.
Alterations: normal qualified - no permission to undertake any alterations without landlords consent, not to be unreasonably withheld/delayed - subject to prior written notification - non-structural alterations permitted
User - A1 open clause - no restrictive user beyond that (verified planning consent granted for A1 use)
Alienation - normal provisions, assignment or sub-letting of whole (not part), group sharing provisions so long as no L&T r’ship created

Question 13

Kingston Park - rent review clause?

Answer 13

Upward only basis to the market rent using standard assumptions.
Notional term of 10 years, review year 5.

Assumptions (usual):
Property available to let on open market by willing tenant and willing landlord for a term of years as stated (the notional or hypothetical term)
Property fit and available for immediate occupation and use
All covenants observed by landlord and tenant
Property may be used for purpose set out in lease

Disregards (usual):
Any effect of goodwill on tenant’s occupation
Ignore goodwill attached to the property
Tenant’s improvements if landlord consent been granted for the works

Arbitrator determination
RISING/FALLING MARKET?

Question 14

Kingston Park - what was the external/internal spec?

Answer 14

Two storey mid-terraced retail unit of frame construction with brick cavity walls, ground floor sales with food prep to rear, suspended ceiling, EE lighting, air con, upper floor similar internally, staff, office, WC
No defects noted
Measured NIA (OR GROSS?) overall (as units in this location were) - 1,025 sq ft ground floor, 745 sq ft first - agreed between parties

Question 15

Kingston Park - describe Kingston Park/in relation to subject unit/comparable locations.

Answer 15

Located in Kingston Park, one of largest retail parks in North East. Generally comprises larger retail warehouse operators, including Sports Direct, TK Maxx, Matalan, Halfords etc.

Alongside this are smaller units - McDonalds, Costa, Dominos Pizza, Ladbrokes

Either in ‘pods’ in other areas of Kingston Park, within Tesco Extra, or within same terraced block as subject.

Question 16

Kingston Park - rental valuation - pitch commentary?

Answer 16

Kingston Park Shopping Centre (subject) - inferior to other nearby parts of Kingston Park (concessions within Tesco anchor store, and Kingston & Belvedere Retail Parks - Tesco is the anchor, and majority of traffic into park comes from A1, passing by Belverdere/Kingston Retail and often on to Tesco (concessions), whereas subject slightly poorer pitch park as traffic to Tesco Extra does not pass it.
Subject unit is very prominent however, fronting main access road to the car park.
Subject part of 4 unit parade - but superior as shopfront onto access road, whereas other 3 have shopfronts on to side, less road visibility.

Question 17

Kingston Park - rental valuation - subject lease terms (and psf), comparison with other main location rates (psf), therefore what did you advise (rent)?

Answer 17

Subject lease: 10 years, approx. 1.25 years to expiry, RR assumes 10 year lease with review year 5.
Passing rent reflected 18 psf, 2.50 ff (20,000)
Notional term - 10 years - evidence was generally for 10 year unbroken term certain - could be different but just say that for now.

Landlord proposed 30 psf based on 30 psf ground floor, 10 psf first floor (45,000), on the basis of Belverdere pods:
Let in 2016 - net effective rents between 28 - 33 psf.
OMLs Tesco Concessions - similar sized, all let on 10 year leases 2014 - 2016 - reflected between 20 - 25 psf.
LR Carphone Warehouse Kingston Court - 2018, and lease renewal, but only evidence of similar size to subject in same location - 30 psf / 3 psf first floor agreed.
I advised the MR should be 25 psf, 2.50 psf ff, 27,500 p.a.

Question 18

Kingston Park - rental valuation - why did you advise the MR should be 25 psf, 2.50 psf ff, 27,500 p.a.?

Answer 18

I believed market had improved (rather than deteriorated) from 2015 to 2016 and therefore:

OML Tesco concessions were let in this time frame, and had a similar pitch quality, albeit they were within Tesco and therefore a 3rd party could take a different view (20-25 psf)

Belvedere pods OMLs in 2016 at 28-33 psf reflected improved market sentiment, and fact that better pitched and new premises

2018 LR Carphone Warehouse Kingston Court also reflected the market improvement at 30 psf / 3psf for first floor - I would argue it is however both too post-dated to be relevant and a lease renewal, and therefore of less importance than other OMLs.

There was therefore inconsistency in the evidence - and therefore a risk an Arbitrator could for instance give more credence to Carphone Warehouse as the only recent letting in the subject block, and decide that the market had in fact deteriorated since 2015, and therefore the rates achieved in Belvedere 28-33 psf would justify a rate of say 30 psf for subject, (38,000 p.a.), which could be supported by only comparable transaction in subject block (Carphone Warehouse) at 30 psf.

Question 19

What is included in a trigger notice?

Answer 19

Without prejudice - important
Two parties
Address of property
References lease dated
We hereby give you notice in accordance with RR Schedule - having taken L’s instructions, proposed to increase to £X pa.
Signed notice of safe receipt, who will be dealing with it.

Question 20

Kingston Park - what did the Ls surveyor respond with, and what advice did you therefore give to you client?

Answer 20

Landlord’s surveyor response:
Conceded that rate applied to FF too high and that area being used too large, based on sub-letting in subject block at 3 psf - reduced proposal from 45,000 to 40,000 to reflect this - still at 30 psf though
Threatened to appoint an arbitrator.

I discussed the matter with my client:
Depending on how a 3rd party would view the evidence, there was possibility of between 30k - 100k in back rent. The evidence to some degree was up to interpretation and weighting (heirarchy), in addition to whether an arbitrator would judge whether market improving or declining.
On the basis that the landlord was primarily looking to asset manage for a future sale and my client would be happy to continue in the location subject to a reasonable rent proposal, I recommended the best option was to offer a 5 year reversionary lease at 30,000 (? psf) to reflect the current market conditions - which would provide the market evidence landlord requires to obtain rental increases in other 3 units, and would also ensure that my client did not have to incur a potentially large and uncertain back rent payment.

This was subsequently agreed, solicitors circulated Memorandum and reversionary lease, signed, back rent raised.

Question 21

S Shields - what was the fee basis?

Answer 21

EASIEST FIXED/MINIMUM FEE

Question 22

S Shields - what were clients objectives/when were you instructed/with what impact?

Answer 22

Client had long term objectives - secure a renewal at the market rent if possible, but more importantly get at least a 5 year term to a national covenant, as the property was in a secondary suburban pitch with an increasing number of local occupiers, albeit their remained a lot of nationals.

I had been instructed to settle the renewal 2 months after expiry of existing term - neither party had taken any actions to renew or indications to vacate. (3 months notice issue again).

Question 23

S Shields - what documentation did you request/check?

Answer 23

Requested documentation:
Existing lease:
Checked not contracted out
Checked it was signed
Lease plan
Checked with client no licences, or deeds/variation in lease existed.
Confirmed that tenant had not served a S26, or a S27, was therefore ‘holding over’.
No notices served as of yet.

Question 24

S Shields - summary of lease terms (excl. RR clause)?

Answer 24

Passing rent: £20,000 p.a. (30 ZA)
5 years
Repairs: to keep in repair FRI, analysis of comparable transaction leases were on same basis - not wider than usual repairing clause.
Alterations: normal qualified - no permission to undertake any alterations without landlords consent, not to be unreasonably withheld/delayed - subject to prior written notification - non-structural alterations permitted
User - A1 open clause - no restrictive user beyond that (verified planning consent granted for A1 use)
Alienation - normal provisions, assignment or sub-letting of whole (not part), group sharing provisions so long as no L&T r’ship created

Question 25

S Shields - what was the external/internal spec?

Answer 25

Single storey period mid-terraced retail unit in South Shields, load bearing solid brick walls, pitched slate roof, suspended ceiling, electric heating.
Open sales accommodation to front, full glazed frontage, columns, but open plan, structural wall separating rear ancillary tea room and WC.
Measured ITZA 699 sq ft.
No defects noted

Question 26

S Shields - rental valuation - describe pitch/in relation to subject unit/comparable locations/ZA rates, and therefore what advice to client?

Answer 26

Secondary retail location, but in residential suburban area, so doing reasonably well - few vacancies, lot of nationals providing local services (groceries, chemists etc.)

Pitch:
Property situated on superior eastern half of parade
Eastern half occupiers included Sainsburys, Vets4Pets, Dicksons, Heron Foods, Boots - Zone A rates c. 30 ZA
Moving west still a good number of national covenants, but increasing no. of local businesses, and a couple of vacancies (no vacancies around subject) - Zone A rates c. 26 ZA
Lack of activity at subject end, with more historic lease renewals (2016) at 30 ZA.
More recent OML evidence at poorer western pitch at 26 ZA generally, with most recent at 27 ZA.
Generally 10 year, 5 year break, or 5-6 years unbroken, FRI, all units similar size.
Reported to client that I would anticipate a 3rd party to analyse the evidence as follows:
LRs near subject would be taken into consideration as only nearby recent transactions, which at least suggest ZA rates have not declined in recent years.
OMLs at poorer western pitch are very similar to ZA rates achieved at this pitch at time original subject letting (2015).
And would therefore conclude that the evidence shows that market conditions have not changed over past 5 years.
Therefore advised my client to not serve S25 at this time, as rent unlikely to increase, and to seek to renew the existing lease at 20,000 (30 ZA).
I passed on offer to tenant to renew by way of open negotiation - (subject to contract and without prejudice).
Tenant indicated they would accept.
Drafted HOTs on that basis, again STC / w.o. Prejudice.
Both client and tenant stated approval, so passed on to solicitors to complete renewal lease, liaised through to completion.

Question 27

Fulwell - what was fee basis?

Answer 27

???? - flat fee + % of T starting point, % of difference of reduction - started at £38k, got it to £30k
EASIEST FIXED/MINIMUM FEE

Question 28

Fulwell - what were client objectives?

Answer 28

Unit let to Semichem Ltd (national covenant, low risk, better than norm for location, which was slowly declining but remained a reasonably strong suburban retail location) for 5 year term which expired end of November 2019, at £15,000 p.a. I was approached in February 2020 - the landlord had been trying to openly negotiate a renewal, but tenant had been stalling. I was instructed to deal with matter, noted that tenant could leave on 3 months notice (S27), lack of income security at present.

Client believed rent should be significantly higher, wanted this rental increase.

Client prioritised this over income security, as investment value was of less importance (private investor, no lending agreement in place), albeit ongoing income was of course also important.

Question 29

Fulwell - what checks did you do in lease/what did you confirm?

Answer 29

Existing lease:
Checked not contracted out
Checked it was signed
Lease plan
Checked with client no licences, or deeds/variation in lease existed.

Confirmed that tenant had not served a S26, or a S27, was therefore ‘holding over’.

Tenant received trigger notice from landlord - we were then subsequently appointed

Question 30

Fulwell - what were the lease terms?

Answer 30

Passing rent: £15,000 p.a.
5 years
Repairs: to keep in repair FRI, analysis of comparable transaction leases were on same basis - not wider than usual repairing clause.
Alterations: normal qualified - no permission to undertake any alterations without landlords consent, not to be unreasonably withheld/delayed - subject to prior written notification - non-structural alterations permitted
User - A1 open clause - no restrictive user beyond that (verified planning consent granted for A1 use)
Alienation - normal provisions, assignment or sub-letting of whole (not part), group sharing provisions so long as no L&T r’ship created

Question 31

Fulwell - external/internal specification?

Answer 31

Single storey period mid-terraced retail unit in Fulwell, Sunderland, load bearing solid brick walls, pitched slate roof, suspended ceiling, electric heating, historically 2 units that had been combined. Extended to rear, flat roof.
Open sales accommodation to front, full glazed frontage, columns, but open plan, structural wall separating rear ancillary tea room, store and WC.
Measured ITZA 1,037 sq ft.
No defects noted

Question 32

Fulwell - rental valuation - pitch considerations, evidence considerations, advice to client?

Answer 32

Property occupies good west towards western end (national covenants i.e. ?), vacancy rates relatively low, whereas going east more vacancies. That said very few units were doubles, increased risk potentially.
West of the property:
2018-19
16-18 Sea Road LR: double unit directly opposite subject, most recent transaction, 10 years, 5 year break, £22,000 p.a. (£23 sf ZA, 5% for shape).
12 Sea Road OML: say double unit, subject side of street, £23.50 ZA, 5 years, 3 year break/RR, A3 user, potential premium.
4 Sea Road OML: 25 year FRI, 5 yr RRs, £27.47 ZA, single unit, best part of street
2015
11 Sea Road OML: 15 year FRI, year 10 review, 3 yearly RRs, single unit, £29 ZA
East of the property, all 2016/2015:
25 Sea Road OML: neighbouring unit, 10 year FRI, single unit, £29.76
42 Sea Road LR: 10 year FRI, year 5 break, £24 ZA.
41 Sea Road OML: 3 year FRI, tenant break after 12 months, £20 psf ZA (say tenant holding over)

So - two larger units, directly opposite at £23 ZA, but LR. And more prime position (12 SR) - £23.50 ZA.
Single units range between £28 - £30 ZA at good pitch end of street, albeit subject at end of good pitch.
Evidence generally shows rents have remained stable at this level - no obvious difference between the highest rents (c. £30 ZA) and lower, single unit evidence is at £27-30 ZA.
However, clearly a quantum discount must be applied to reflect the fact the subject is a double unit.
Subject property subject to LR in 2014, renewed at same rent of £15,000 p.a., reflects £15.22 psf ZA with 5% quantum allowance.
Although there is some uncertainty in the evidence which make it challenging to decide on MR for a double unit, the rent is clearly reversionary.
Advised client that a Court would consider the following:
LR opposite - although most recent letting, it was a lease renewal, therefore would not be given much weighting (£23 ZA)
12 SR - better pitch (in centre of prime part) (£23.50 ZA), would be given more weighting, but only agreed with 5 year term, 3 years to break.

Anticipated Court would apply £20.50 ZA to subject to reflect poorer pitch, and assuming a slightly longer term certain (5 years, 10 year lease), as that was more inkeeping with market norms, and the reasonable expectations of an investor.

Question 33

Fulwell - what advice did you provide to your client and why?

Answer 33

I provided a report to client in Feb 2020, stating the following advice:
Serve S25 Notice ASAP - rent clearly reversionary, will fix new lease start date 6 months from date of service, prevent further delay for any rental increase.
To allow negotiation room: quote 10 year lease, all other terms same other than 5 year review, £23,000 p.a. (£23.25 ZA).
Advised (at time) that although Semichem are likely to be resistant and may decide to walk away (with 3 months notice, S27), there is no need to be held ransom as evidence clearly demonstrates re-letting rents achievable.
With clients permission to continue, instructed solicitor to serve S25 on terms recommended.
Interim Rent - should I have advised to do that too? Ask Harry.

Following the S25 notice service, tenant began engaging in open negotiation in March 2020:

At this point COVID-19 was in full swing, potentially very significant impact on retail prospects going forward.
Tenant had concerns over ongoing trade prospects in location, and was threatening to vacate if a renewal was not agreed at passing rent.

I discussed with client, who still wanted the Market Rent uplift, and noted the following considerations:
Void periods pre-pandemic were approx. 6 months, with 3 month rent free incentive.

This was undoubtedly going to increase in the short term.
Semichem were a low risk national covenant in an area of local higher risk businesses - there was a significant risk in current market that a local covenant would take space. In addition, agreed term lengths & rents may be lower than previous to pandemic, albeit this was difficult to judge. In short, reletting could now result in poorer income security than previously.

The tenant could serve a S27 notice, with only 3 months notice to end tenancy, which would result in a potentially 12-15 month void, with all associated costs.

As a double unit, the risks of a lower rent would be even higher in current market, as tenants generally looking for lower overheads, smaller spaces.

Going to Court would be expensive.

I therefore advised client to put forward an offer that would lead to a higher rent, and may be acceptable to tenant:
£21,000 p.a.
5 years
Rolling break subject to 12 months written notice

I advised that 12 months notice should provide my client sufficient time to mitigate any future void period if the tenant exercises the break, based on previous voids in area being approx. 3-6 months, with 3 months rental incentive, which would increased to potentially 12-15 months total in current market conditions.

I recommended that for any future work the client may have for me, to instruct me 18 months out, as this would provide ample time to serve a S25 notice 12 months out from expiry, which would have provided a stronger negotiating position as the tenant could not leave on 3 months notice, and you would therefore be better positioned to ascertain their intentions, and market the property in the interim, to hopefully reduce the void period.

Question 34

Team Valley - fee basis?

Answer 34

???? - flat fee + % of T starting point, % of difference of reduction - started at £38k, got it to £30k

Question 35

Team Valley - clients objectives?

Answer 35

Minimise rental uplift + try and openly negotiate without 3rd party costs.

Question 36

Team Valley - what checks did you do in lease/what did you confirm?

Answer 36

Existing lease:
Checked not contracted out
Checked it was signed
Checked whether time of essence - wasn’t, but if was, the RR date had already passed, therefore would have advised client to not proceed, as not exercisable.
Lease plan
Checked with client no licences, or deeds/variation in lease existed.
Rent review trigger - lease was silent, therefore assumed either party could trigger.
Tenant received trigger notice from landlord - we were then subsequently appointed

Question 37

Team Valley - lease terms (excl. RR clause)?

Answer 37

Passing rent: £19,456 p.a.
10 years
Year 5 review
Repairs: to keep in repair FRI, analysis of comparable transaction leases were on same basis - not wider than usual repairing clause.
Alterations: normal qualified - no permission to undertake any alterations without landlords consent, not to be unreasonably withheld/delayed - subject to prior written notification - non-structural alterations permitted
User - A1 open clause - no restrictive user beyond that (verified planning consent granted for A1 use)
Alienation - normal provisions, assignment or sub-letting of whole (not part), group sharing provisions so long as no L&T r’ship created

Question 38

Team Valley - rent review clause terms?

Answer 38

Upward only basis to the market rent using standard assumptions.
Notional term of 10 years, review year 5, break ignored.
Important: rent reviewed on basis property use limited to B8 (assumed use overrides lease use, therefore assuming B8)
As long as Greggs tenant or group member, reviewed rent must be 115% of B8 rent.

Ass and Disr. usual
Independent Expert determination, paid equally unless Expert otherwise determines. - AWARD OVER THEIR OWN COSTS, NOT COSTS IN GENERAL (COSTS OF 2 SURVEYORS FEES) - WHEREAS ARBITRATOR CAN AWARD ALL COSTS.
RISING/FALLING MARKET?

Question 39

Team Valley - external/internal location, broad location?

Answer 39

Single storey mid-terraced mid-terraced trade counter unit in Tenth Avenue Trade Park, built 2007, steel portal frame, fitted by Greggs for bakery purposes, stud wall construction - sales with staff/tea/WC off, suspended ceiling, AC.
No defects noted
Measured GIA - 2,687 sq ft (provisionally agreed with Emily Seager) - agreed between parties.
Older park of trade park (TAT West) built 1980’s, includes Topps Tiles and Tile Giant.
Both located on main access road into TV Retail World - includes range of large national retailers.

Question 40

Team Valley - rental valuation - pitch, rental pattern over time, what did L propose, and what did you advise your client to offer + why? MASSIVE - NEED TO SPLIT UP/SHORTEN…

Answer 40

Pitch:
U1-5 TATP similar quality, U6 worst pitch (poor road visibility, mid-terraced corner unit, low proportion of frontage to size)
U7 arguably best pitch, closer to main road, better visibility
Subject lease: 10 years, approx. 3 years to expiry, let on similar terms to other units, other than U1 (6 year term), RR assumes 10 year lease with review year 5, & break option disregarded.
Rental evidence -
Steady increase in achieved rents from c. 8 psf (2007), 9.50 psf (2012), 10.50 psf (2017), and 11.50 and 12 psf (2019).
Both parks good quality, although more modern 2007 built TATP should achieve slightly higher rent.
Lease terms all FRI, mainly 10 year leases for 5 year break or 6 year lease unbroken.
Passing rent 7.25 psf, clear that significant increase is due, got a very good deal initially.
Landlord proposed 38,700 p.a. (14.40 psf), however if 15% allowance for A1 use factored in then this reduces to 12.52 psf for B1/B2/B8 use - in my opinion too high.
Unit 1/2 T.A.T.P. date from 2013 - equate to 10.60 psf, 2018 reviews outstanding - I believe Landlord will struggle to justify an increase, albeit 3rd party applications have been made.
U4 TATP on market, asking 12.50 psf - if letting agreed now, I believe too remote from your review date to be relevant.
U5 let 2014 (3 years prior to review date) - might be viewed as too historic - net rent 9.45 psf.
U6 most recent letting, more than double subject size, location poorer as corner unit (less frontage) - advised would be difficult to persuade a 3rd party to attach much weight - 6.40 psf
Units 1 and 3 Trade Park West (older, 1980s) - both recent lettings of similar size, albeit older/arguably inferior to subject. Achieved headline rates of 12.50 psf (headline), but A1 user clause. Advised this would be subject worst case scenario - net effectives between 11.45 - 11.88 psf. However advised both should be disregarded.
Unit 2 Trade Park West - close to review date but a bigger unit, therefore reverse quantum likely to be made, similar B1-8 user clause. Arguably best evidence, 10.69 psf. However would have to +15% to reflect subject A1 use, increasing to 33,000 p.a.
Net A1 rents c. 11.50 psf, B1-8 rents c. 10.50 psf

Advice to client:
Budget for 33k.
Will try to negotiate lower, but if faced with Calderbank at this level should perhaps give it serious consideration.
Alternative - service Calderbank at 31,500 p.a. - may be sufficient to persuade landlord to accept it rather than have to incur costs of proceeding to I.E. determination, where costs shared, not split as Expert determines.
Calderbank - costs split as Expert determines -
Arbitrator: power over all costs (e.g. parties’ surveyors, experts and legal advisors)
Independent Expert: power over their own costs
Lease:
Only Calderbanking over I.E.’s fees - so say if L wanted £11.50 psf, I thought £11.35 psf - so basically want to get extra evidence - extra evidence at 11.35psf, added extra weight -
Calderbank only applies to c. £1,000 - 2,000 (I.E. fees)
Other parties’ surveyors, experts, legal advisors - would cost £4-5k
£11.35 = £30,500 p.a.
£11.50 = £30,900 p.a.
£2,000 capital difference
But have to be very certain.

In a follow up discussion I was informed that an Independent Expert had been appointed due to my client being slow to initially instruct our services. I recommended holding the matter in abeyance, anticipating that there may be further evidence to
support a lower uplift, which could result in a settlement through open negotiation and thereby negate the need to incur third party determination costs.

I discussed the possibility of serving a Calderbank with the client on the basis of my supplementary evidence. However, having put forward my analysis of the differences in Use Classes and pitch within the evidence, the landlord accepted a settlement at £11.35 psf.