An in-house CPD seminar led by Rufus Ballaster in April 2014 at Carter Lemon Camerons LLP promoted the view that rent review should be a win-win situation not a pitched battle between solicitors.
In the context that the lawyers at the firm have a wealth of experience of drafting, negotiating (and occasionally even advising during the later dispute resolution process) rent reviews, Rufus explored with colleagues issues like why rent reviews are a good thing for landlords and for tenants, how rent review can be achieved, why “open market value” is so often the preferred method for rent review and what the four principal component parts of a rent review clause or schedule ought to be.
In an open forum of anecdotal sharing of highs and lows of professional experience or training of what can go wrong with all forms of rent review, we explored
- defective RPI clauses which double or triple count the early review uplifts,
- fixed uplifts causing a sensible ground rent inflation proofing but a property tax nightmare,
- OMV provisions which calculate rent and add it to previous rent, turnover provisions which prevent ease of assignment,
- VAT assumptions and the need for hypotheses that the assumption is missing to avoid the risk of the assumption aimed to keep rents up in fact pulling them down,
- judicial interference to freedom of contract by implying into leases where the landlord can nominate the location of the hypothetical premises that such location must be similar to the actual one, and
- a host of other nightmares from which the profession should learn.
If you would like a copy of the PowerPoint slides used in the seminar or if this article sparks a question in your mind on the topic, please contact Rufus Ballaster.