A rent review allows you to adjust your payments to reflect what’s currently on the market. Your lease agreement should include a rent review clause stating the date your rent can be reviewed. Your rent can then be adjusted with yours and the landlord’s mutual agreement. Rent adjustments are at the landlord’s discretion and dependent on a surveyor’s report. But it generally is in the landlord’s interest, that the rent review should include the tenant’s financial and business interests. It should also reflect the current market. Often landlords offer short leases so that when renewing a lease, rent charges may also be reviewed.
The Open Market Rent (OMR) is the way rent is valued according to market trends and the current national economic climate. This is the most common way landlords and tenants assess their own rent charges and payments, by checking the OMR or also known as the Open Market Rental Value (OMRV). Commercial property rent should be reasonably charged at market value, which means that rent could be increased and sometimes even decreased to reflect this.
Generally and in practice, at the end of the fourth year of commercial leasing, landlords will appoint a surveyor who will use their expertise in the area, in order to assess the property in relation to OMR (or OMRV). Often open to debate and interpretation, the final valuation will help the landlord and tenant to agree on the rent review which reflects on both the surveyor’s report and Open Market Rent.
If you would like us to help you with your commercial lease agreement or review your rent, please give us a call for an informal discussion. We work with surveyors who will assess the property and local area, and make an assessment in line with the commercial property market. We will look at your commercial lease agreement and ensure that it serves purpose for your business. SG
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