Commercial rent review terminology explained
- Assumption
- A circumstance the rent review clause requires to be treated as true for the hypothetical valuation.
- Arbitrator
- A third party acting in an adjudicative capacity to determine a dispute where the lease provides for arbitration.
- Back rent
- The balancing payment that can arise where a revised rent takes effect from an earlier review date.
- Cap
- A contractual maximum on an increase under a review mechanism.
- Collar
- A contractual minimum increase or minimum resulting rent under a review mechanism.
- Comparable evidence
- Market transactions analysed to inform an opinion of rental value.
- CPI
- Consumer Prices Index, sometimes used as the index in an index-linked rent review.
- Disregard
- A matter the rent review clause requires the valuer to ignore.
- Effective rent
- A rental analysis that takes account of relevant incentives rather than considering headline rent alone.
- Geared rent
- A rent linked by formula to another rent or value, depending on the lease drafting.
- Headline rent
- The stated contractual rent before analysing incentives or other transaction terms.
- Hypothetical lease
- The assumed letting terms specified by the rent review clause for an open-market valuation.
- Independent Expert
- An appointed expert who determines the matter as an expert where the lease provides for expert determination.
- ITZA
- ‘In terms of Zone A’, a method used to analyse retail accommodation on a common Zone A equivalent basis.
- Market rent
- For rent review purposes, the rent produced by applying the lease’s contractual valuation provisions to the relevant market evidence.
- Passing rent
- The rent currently payable under the lease before any new reviewed rent takes effect.
- Review date
- The date specified by the lease for the rent review.
- RPI
- Retail Prices Index, used in some contractual index-linked rent reviews.
- Upward-only
- A provision under which the reviewed rent cannot fall below a specified existing rent or level.
- Zone A
- The front retail zone used as the primary unit of comparison in conventional shop zoning analysis.
This glossary provides general explanations only. Defined terms in an individual lease must be interpreted in their contractual context.