Property Law 6 - Rent Review

Question 1

What are the four types of rent review?

Answer 1

• Stepped rent - increase by set amount
• Index-linked rent - increased by reference to an index
• Turnover rent - calculated by the tenant’s turnover
• Open market rent - MV

Question 2

When thinking about MV, What assumptions are there on a hypothetical lease?

Answer 2

• the tenant has complied with covenants
• the landlord has complied with all its covenants
• on the same conditions as the actual lease
• same term as lease
• if damaged/destroyed, the premises have been repaired or rebuilt.

Question 3

What disregards are there on a hypothetical lease for a rent review?

Answer 3

• the effect of the tenants occupation
• goodwill attached to business
• tenants improvements

Question 4

What happens after the rent review is complete?

Answer 4

The new rent is documented in a “rent review memorandum”

Question 5

What are the risks of a rent review before the first 5 year anniversary?

Answer 5

SDLT may be due may be due as its calculated by the first 5 years of rent