A commercial rent review is a contractual mechanism within a lease that allows the rent to be reconsidered at specified dates. It does not automatically mean that the rent rises by a particular percentage: the lease determines the method.
Open-market rent reviews
Many UK commercial leases provide for the rent to be reviewed to the open-market rent of the premises at the review date, subject to assumptions and disregards contained in the lease. The exercise is therefore both a lease interpretation and valuation exercise.
Other review mechanisms
Some leases use RPI or CPI indexation, fixed increases or another formula. The exact drafting should be checked before any calculation is made.
Why reviews become disputed
Differences commonly arise over comparable evidence, property characteristics, incentives, lease assumptions, permitted use and the weight to place on individual transactions.
What happens if agreement cannot be reached?
The lease will normally specify a dispute-resolution mechanism, often determination by an independent expert or arbitrator.