Commercial property is held as an asset by a number of entities, including private individuals, companies and pension funds and for a number of various reasons. In the majority of cases however the reason property is held is to provide a financial income to the owner by way of an investment. As a result, ensuring that the investment is providing a full and reasonable return is paramount and it’s crucial for both landlords and tenants to understand key concepts. One important aspect is the rent review process—a way to ensure that the rent stays fair and reflects market conditions.

Understanding Rent Reviews

A rent review is when the rental amount for a property is checked and adjusted if needed. It usually happens at certain times, making sure the rent stays competitive and fair based on current market conditions and lease provisions. Rent reviews give both landlords and tenants a chance to adjust their financial arrangements to match changes in the economy and property values.

Different Types of Rent Reviews

There are a few ways to do rent reviews and here are the most common ones:

Market Rent Review: This means looking at similar properties in the area to figure out how much rent is reasonable. It’s common for commercial leases to use this method to make sure the rent matches the property’s value.

Fixed Increase Review: With this approach, the rent goes up by a set amount or percentage at certain times. It gives both landlords and tenants a clear and predictable way to plan for the future.

RPI (Retail Price Index) or CPI (Consumer Price Index) Review: This method links rent changes to inflation. It helps landlords and tenants make sure the rent keeps up with the cost of living over time.

Why Rent Reviews Matter:

Fair Deals: Rent reviews ensure that the rent payable is fair & reasonable and in line with the market and lease provisions.

Planning for the Future: Rent reviews help both landlords and tenants plan their finances for the long term. It makes budgeting easier and reduces the risk of money troubles for both parties.

It is important to recognise the importance of fair and regular rent checks to not only help landlords and tenants financially but also keeps the property market stable. By staying informed and making sense of rent reviews, we create an environment where renting property is clear, fair, and forward-thinking.

Need help with an upcoming rent review? Get in touch with the team today.