Rent Reviews Flashcards
What is the usual type of rent review?
Upwards only to market rent
Is time normally of the essence?
No
United Scientific Holdings v Burnley Borough Council (1977)
What are the 4 usual assumptions for a rent review?
- Property available to let on open market by willing tenant and willing landlord for term of years as stated.
- 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.
What are the 3 usual disregards in a rent review?
- Any effect of goodwill on tenant’s occupation.
- Ignore goodwill attached to property.
- Tenant’s improvements if landlord consent had been granted.
What is the notional/hypothetical term of the lease?
The length of term to be value.
If the lease is silent on the notional/hypothetical term what should be valued?
The residue of the term.
What happens if there is a deeming provision within the lease which requires the landlord to specify the rent in a trigger notice, with the tenant being deemed to accept the new rent if they do not serve the appropriate counter-notice within a specified time?
Deeming provisions.
What evidence is at the top of the hierarchy when determining market rent?
Open market lettings
Then: Rent reviews and lease renewals Independent expert determinations Arbitrator determinations Court determinations under LTA 1954 Hearsay evidence Sale and leasebacks Surrender and renewals Inter-company arrangements
What can be used to achieve an early resolution of a dispute and save on costs?
Calderbank letter
How must a Calderbank letter be headed?
‘Without prejudice save as to costs’
What does the losing party have to pay?
The other sides’s recoverable costs
What must the letter set out?
All of the terms to settle the dispute and a time limit in which the other party must accept the offer.
What is the usual Calderbank offer time limit?
21 days
A Calderbank letter must be a genuine offer to settle and not simply used as a mechanism to _____ costs or pressure the other party.
Influence
Who is obliged to make an award for costs?
The arbitrator
What is the similar mechanism to Calderbank for lease renewals?
Under Part 36 of the Civil Procedure Rules
What four recommendations for rent reviews does the Code for Leasing Business Premises 2007 set out?
- RR clause should be clear.
- Headline RR clauses should not be used (where valuation cannot take into account any incentives agreed to arrive at a net effective rent).
- Landlords should on request offer alternatives to their proposed option for RRs based on a risk-adjusted basis.
- Leases should allow both parties to start the RR process.
How is the method of determination established for a rent review?
Read the clause in the lease.
An independent expert has detailed _____ of the market as a valuer.
Knowledge
An independent expert is appointed by who?
President of RICS by Dispute Resolution Service
An independent expert is not bound by what?
Judicial rules
An independent expert can have his own opinion as to the _______ _____.
Market rent
An independent expert is bound by the terms of the _____.
Lease
The decision of an independent expert cannot be _____ against but they can be sued for _______.
Appealed, Negligence
How is an independent expert involved?
Via a hearing or written representation
An independent expert is good when there is a lack of _____ _________ and need to be up to date.
Market comparables
Does an independent expert have the power to order disclosure?
No
An independent expert orders ____ as set out in the lease.
Costs
In which case was an expert’s determination of a rent review not held to be binding due to his decision being based upon an incorrect interpretation of the rent review clause?
Level Properties Ltd v Balls Brothers Ltd (2007)
Who appoints an Arbitrator?
RICS President using Dispute Resolution Service
An arbitrator can decide how to _____ the case and order ____.
Hear, Costs
An arbitrator can only use ____ submitted by the parties, and/or from an _____ ______.
Evidence, Expert Witness
Arbitrators are immune from _______.
Negligence
Arbitrators can order _______.
Disclosure
What happens if an Arbitrator orders disclosure of documents by the parties to the arbitration?
It entitles a party of obtain details of all the other side’s rental evidence (when they would prefer to confine submissions to deals most favourable to their case).
Which Act is relevant to Arbitrators?
Arbitration Act 1996
The Arbitration Act 1996 also sets out the procedures to secure the attendance of ________ or the ________ of third party documents.
Attendance, disclosure
An Appeal to the High Court can be made within 28 days under what three grounds?
- A challenge to the tribunal’s jurisdiction.
- On a point of law.
- Serious irregularity.
Who acts on the evidence provided and the arguments submitted?
Arbitrator
Who has a duty of investigation to discover the facts, details or comparables and other relevant information, and does not have to just consider the evidence provided (own knowledge and expertise can be used).
Independent expert
________ provides a limited right to appeal to the High Court.
Arbitration
Who can be liable for damages as a result of negligence by being sued?
Independent expert
Who has no powers of disclosure?
Independent expert
Who acts within a formal statutory framework?
Arbitrator
Who acts with an informal procedural timetable?
Independent expert
Who makes an award?
An Arbitrator
Who makes a decision as an outcome?
Independent expert
Who would be preferable to act for a landlord in a falling market?
An arbitrator
Who would be preferable to act for a landlord in a rising market?
An independent expert
Who would be preferable to act for a tenant in a rising market?
An arbitrator
An advocate represents his client at a ______ or in ______.
Hearing, court
What is the relevant RICS Practice Statement relating to Advocates?
Surveyors Acting as Advocates 2008
An Advocate’s duty is to act in the best interests of _______.
His client
An Advocate must act with _______.
Integrity
What is the relevant Practice Statement and Guidance Note relating to Expert Witnesses?
Surveyors Acting as Expert Witnesses 2014
Surveyors Acting as Expert Witnesses applies to evidence given to ______ and ________ ______.
Arbitrators and Independent Experts
Expert evidence provided by a chartered surveyor must be seen to be ________ and objective.
Impartial
Who is the surveyors duty to as an Expert Witness?
The Court
What must be clearly stated within the Terms of Engagement for an Expert Witness instruction.
Fee basis
What does the Expert Witness have to sign at the commencement of his evidence?
Statement of Truth
Can the exert witness be sued for negligence?
Yes, following Jones v Kaney 2011
What are the contents of a rent review memorandum?
Name of L & T
Address of property
Date of lease and rent review
Confirmation of new rent agreed
Signed and dated by both parties
** Can also be recorded by an independent expert’s decision or arbitrator’s award or written acceptance of the Calderbank Offer.
When answering any question on rent review, what should you always state?
You would read the rent review clause in the lease.
What scheme is run by the RICS to have an independent surveyor settle disputed rent reviews for commercial properties with a rateable value of less than £10,000 (£15,000 in London)?
RICS Small Business Scheme for Rent Reviews
