From the review date to settlement or third-party determination
The Rent Review Journey is a visual guide to the typical stages of a UK commercial rent review. The precise process always depends on the lease.
Identify the review mechanism
Start with the lease. Establish the review date and whether the review is open-market, index-linked (such as RPI/CPI), fixed or formula-based.
Review date
The contractual review date is the valuation date or calculation point specified by the lease. The revised rent may ultimately take effect from this date even if agreement comes later.
Notice or proposal
One party may serve a notice or put forward a proposed rent. Requirements vary considerably, so the lease should be checked for form, timing and procedural consequences.
Analyse the lease and property
For an open-market review, identify the hypothetical lease, assumptions, disregards and relevant property characteristics. For an indexed or formula review, identify the contractual calculation precisely.
Gather market evidence
For open-market reviews, investigate relevant lettings, renewals and review evidence. Analyse incentives, lease terms, size, specification, location and permitted use rather than relying on headline rents.
Establish each party’s position
Landlord and tenant may have different rental opinions. A reasoned valuation should connect the lease assumptions to the available evidence.
Negotiate
Evidence and arguments are exchanged and the parties seek agreement. Many rent reviews conclude here without formal third-party proceedings.
Agreement
If terms are agreed, the revised rent is documented. Any balancing payment, back rent and contractual interest should then be addressed.
No agreement
If negotiations reach an impasse, the lease may allow or require a referral to a third party. Check the appointment procedure before taking formal steps.
Independent Expert or Arbitration
The lease normally specifies the route. An independent expert and an arbitrator perform different roles and the procedure, evidence and costs implications differ.
Determination and completion
The rent is determined, the financial adjustment is dealt with and the outcome should be recorded. The parties can then plan for the next review date.
Different review mechanisms
- Open-market review: rent is assessed by reference to the hypothetical letting required by the lease and relevant market evidence.
- RPI/CPI-linked review: rent is calculated using the index and formula specified in the lease, potentially with caps, collars or other adjustments.
- Fixed increase: the lease states the future rent or percentage increase.
- Other formula: some leases contain bespoke mechanisms which must be followed as drafted.
Important: This journey is general guidance only. Rent review clauses and procedures vary. It is not legal advice or a valuation of any particular property.