rent review - can you help with a difficult lessee?

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    rent review - can you help with a difficult lessee?

    Hi there,
    Please advise if possible!

    I have taken over management of a commercial property and one of the properties is up for a rent review. The lessee is particularly obstinate, and has only offered £1000 despite a significant increase of rent in the area. I have spoken to a couple of estate agent / surveyors who have given me mid range prices, but he refuses to entertain their prices at all.

    What is the best next step for me? Should I appoint an individual from RICS to provide a rent review for us both? Can anyone share their experiences regarding this and is it very costly? Alternatively should I appoint a surveyor to take over negotiation?

    Additionally, the rent for his property is now due. Should I invoice him at the proposed new rate or invoice him at the old rate, and state that the rent increase will be backdated at the new amount following agreement of the rent?

    I do hope you can advise.
    Many thanks in advance, Sass

    #2
    If the lease provides for arbitration you have to argue your case before the arbitrator and comply with all the formalities. If it provides for expert determination the procedure is less formal. However, you want to avoid any form of dispute resolution if you can. If the rent offered is well below the market rate, your best bet is to hand the negotiations over to a surveyor.

    Comment


      #3
      Originally posted by Lawcruncher View Post
      If the lease provides for arbitration you have to argue your case before the arbitrator and comply with all the formalities. If it provides for expert determination the procedure is less formal. However, you want to avoid any form of dispute resolution if you can. If the rent offered is well below the market rate, your best bet is to hand the negotiations over to a surveyor.
      Many thanks Lawcruncher, the lease says that if there is a dispute, a surveyor appointed by RICS shall determine rent. Am i right in presuming that this would not be artibration and I wouldn't have to argue my case?

      Also can you let me know that as the rent for his property is now due, if I should invoice him at the proposed new rate or invoice him at the old rate, and state that the rent increase will be backdated at the new amount following agreement of the rent?

      Many thanks again

      Comment


        #4
        Hi the lease should set out the rent review mechanism and how it is to be decided if the parties cant agree.
        It is usual to charge the old rent from the review date and then once the new rent is decided any shortfalls are settled.

        Comment


          #5
          Originally posted by sass View Post
          Many thanks Lawcruncher, the lease says that if there is a dispute, a surveyor appointed by RICS shall determine rent. Am i right in presuming that this would not be artibration and I wouldn't have to argue my case?
          The lease should say whether the surveyor is to act as abritrator or expert.

          Just to clarify the difference:

          An arbitrator, using his skill and judgement, makes his decision based on the evidence produced to him by the parties. In an arbitration you have to produce evidence to support your case and rules apply as to what is admissible. It is similar to, though less formal than, court proceedings. It is not something for the inexperienced to get involved in.

          An expert, whilst he will consider submissions, makes his decision based on his experience and knowledge. The procedure is more flexible and informal, but you cannot really go into it and expect to come out smiling if all you say to the expert is "I leave it up to you". Professional help is really needed so that the expert's attention is drawn to matters which may escape his attention.

          Any form of dispute resolution is best avoided. Far better to agree. Employing a surveyor should help.

          Virtually all leases provide as follows: You cannot charge a reviewed rent until it has been quantified. Until it has, the rent will continue to be paid at the old rate, but once the new rent has been agreed or determined a balancing payment has to be made.

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