How to get the most from a rent review

By Dan Mackernan

- Last updated on GMT

Rents can go down: nil uplift may not be a good outcome
Rents can go down: nil uplift may not be a good outcome

Related tags: Rent review, Real estate

With plenty of time in hand, begin putting your information together, and use expert advice, so you can enjoy the spoils of a rent review, says Dan Mackernan, director of licensed leisure at international real estate services company Savills

The key to a good rent review negotiation is preparation. Rent reviews most typically occur every three to five years, but it is important to leave enough time before the due date to plan your response. It is advisable to start putting together information at least 12 months in advance, and to re-read your agreement and code of practice to ensure that there are no other time periods you need to adhere to.

By researching the market and other pubs in the vicinity, you will be able to get an indication of whether rents are rising or falling, and what factors are affecting value — for example, is there a licence for alteration to disregard? Also consider your location and how your business compares to other recent rent review settlements or lettings.

While the landlord’s opening position may sound good, it is best not to take the quoted rent at face value because there are bound to be factors affecting value that they may have overlooked. Rents can go down as well as up, so a nil uplift may not always be the best result.

Tenants should not have to provide accounts (unless stated in the lease) because the rent is based on Fair Maintainable Turnover (FMT) and not your goodwill. Always ask for the landlord’s comparable evidence.

Seek professional advice

Tenants should consider the merits and costs of professional advice as early as possible. The process can be complicated, so taking the advice of a professional rent review surveyor is always worthwhile. While most tenants are specialists in running their businesses, they are not necessarily going to have the knowledge to successfully negotiate their rent. Ultimately, anyone can agree a revised rent, but it takes someone who is experienced to agree the best possible agreement for you.

In order to seek professional advice, RICS (the Royal Institute of Chartered Surveyors) will be able to provide a list of suitably experienced chartered surveyors in your area. It may also be worth talking to other local occupiers to see whether they can make any recommendations. The agent you used to acquire your current property will often be able to suggest an appropriate adviser.

In regards to fees, this will often depend on the size of the property and the complexity of the case. Moreover, often people will agree to a success-related clause, which will provide an incentive to the surveyor to get the best possible result when negotiating your rent.

As with any service, before you appoint someone, it is always worth getting a written proposal from two or three different surveyors’ agents outlining what they can do for their fee. This is a good way to establish who will work best on your behalf. It is important to remember that the surveyor agent offering the lowest fee may not always be the best candidate.

With solid research, and adequate preparation time you should be able to achieve the best outcome.

Related topics: Property law

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1 comment

Excellent Advice

Posted by ken nason,

Especially the bit about re-reading the lease.

Accurate record keeping is essential to the process from the tenants point of view. Know your own pub and it's workings intimately and don't solely rely on your accountant to supply the exact picture.

Don't put off doing the books.

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