SGS 11 - Rent review Flashcards
What other name might an ‘FRI’ lease have?
An ‘institutional lease’
What is stepped rent review?
Where the landlord and tenant agree to increase the rent by fixed amounts periodically
What is turnover rent?
Where the annual rent is calculated as a percentage of the tenant’s turnover at the property for that year
what is index linked rent review?
annual rent is increased by reference to an agreed measure of annual inflation
what is open market rent review?
Reviewed by reference to the market rent of leases of comparable properties in the same locality
When would you expect to see rent review taking place?
Every 5 years but parties are free to agree rent review provisions
Who determines the revised rent?
The landlord and tenant should try to agree the new rent themselves but if agreement cannot be reached a valuer is called in to determine the new rent
If the new rent is not agreed by the rent review date in the lease, what should the tenant do?
continue paying the new rent.
When the new rent is determined, the tenant will be required to pay the difference from the review date.
How should the new rent be documented?
In a rent review memorandum
What wording might a landlord want to insert in a rent review provision which should be resisted by the tenant?
‘the best rent’ that the premises may be expected to be let for - the best rent would allow bidders with a special interest in the property to be taken into consideration who might be prepared to pay higher - drives the rent up
should be the price which the premises might ‘reasonably be expected to be let’
When might a further SDLT payment be payable as a consequence of rent review?
rent review taking place within the first 5 years of the term
rent review which takes on the 5th anniversary or thereafter, only payment if there is an abnormal increase in rent e.g more than 20%
