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London W11
London W11 - 229 Portobello Road
01/Jan/2011
Acting for a Subway franchisee, I was instructed to negotiate the 2011 rent review. The landlord also owns the adjoining property let to Starbucks and we were told that the rent on renewal there had been agreed on more favourable terms in order to deter Starbucks from leaving. The landlord's surveyor proposed a hefty increase which could be softened if my Client would agree to a rising rent.
Before my Client had taken the assignment, the previous tenant had agreed the 2007 review coupled with a personal concession on rent payable. The concession expired on the 2011 review date so my Client had no choice but to pay more in any event.
After I was instructed, the landlord's suggested softening of proposed increase was withdrawn and the full market rent required which the surveyor was adamant should be based, pro-rata, on the Starbucks rent.
The lease plan states the agreed areas overall so the surveyor dismissed any idea the shop should be valued in zones. However, Portobello Road shop rents are zoned, also I discovered that the lease plan had been extracted from a shop-fit drawing that had been prepared for the previous tenant before the lease was granted and which also showed a different layout.
I proposed various figures in the hope of getting the landlord to agree and on one occasion the offer would have been accepted in principle, but I then withdrew it after new evidence came to light. By then, the landlord had implemented the dispute resolution procedure in the hope of pressuring an agreement. I concluded it would be best to allow the referral to go ahead and independent expert determine the rent.
The time-frame in the lease by which the independent expert had to determine the rent was tight and the parties would not agree to any deviation from the timetable. In my submission, I pulled out all the stops.
Much to the consternation of the landlord and its surveyor, the outcome was favourable to my Client. The passing rent before the review was £43,500 pa, the landlord's proposal £56,000 pa, and the Determination £45,700 pa.
The Lease did not require the independent expert to give reasons for the determination and he did not. After the determination was released, the landlord's surveyor sought reasons but I objected on the ground there was no benefit to my Client and the landlord capable to forming his own opinion of how the rent had been arrived at.
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Before my Client had taken the assignment, the previous tenant had agreed the 2007 review coupled with a personal concession on rent payable. The concession expired on the 2011 review date so my Client had no choice but to pay more in any event.
After I was instructed, the landlord's suggested softening of proposed increase was withdrawn and the full market rent required which the surveyor was adamant should be based, pro-rata, on the Starbucks rent.
The lease plan states the agreed areas overall so the surveyor dismissed any idea the shop should be valued in zones. However, Portobello Road shop rents are zoned, also I discovered that the lease plan had been extracted from a shop-fit drawing that had been prepared for the previous tenant before the lease was granted and which also showed a different layout.
I proposed various figures in the hope of getting the landlord to agree and on one occasion the offer would have been accepted in principle, but I then withdrew it after new evidence came to light. By then, the landlord had implemented the dispute resolution procedure in the hope of pressuring an agreement. I concluded it would be best to allow the referral to go ahead and independent expert determine the rent.
The time-frame in the lease by which the independent expert had to determine the rent was tight and the parties would not agree to any deviation from the timetable. In my submission, I pulled out all the stops.
Much to the consternation of the landlord and its surveyor, the outcome was favourable to my Client. The passing rent before the review was £43,500 pa, the landlord's proposal £56,000 pa, and the Determination £45,700 pa.
The Lease did not require the independent expert to give reasons for the determination and he did not. After the determination was released, the landlord's surveyor sought reasons but I objected on the ground there was no benefit to my Client and the landlord capable to forming his own opinion of how the rent had been arrived at.
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London W11 - 31 Notting Hill Gate
25/Dec/2009
The premises, in Notting Hill Gate, London W11 were let in 2004 at £50,000 per annum exclusive for a term of 20 years, with 5 yearly rent reviews. The tenancy is outside the Landlord and Tenant Act 1954. In July 2010, the first tenant (a franchisee of Subway) assigned the tenancy to a new franchisee. Before the assignee took over, negotiations for the December 2009 rent review were on-going, both first tenant and the landlord professionally represented. The landlord, represented by Savills, had proposed £80,000 and after extensive negotiations including Calderbank offers the landlord wanted £72,000 pa whereas the first tenant’s surveyors were at £57,000 pa. The landlord, having initiated the dispute procedure, referred the review to an Independent Expert. Even though the assignee had only just taken over the lease, the review negotiations had reached the stage at which it was necessary to make a decision whether to agree £72,000 pa or allow the Independent Expert to proceed. The fees quoted by the first tenant’s surveyor for acting for the assignee on referral were in the region of £4000 plus VAT, excluding any fees payable to the Independent Expert if the determination of rent were at or greater than the landlord’s Calderbank offer.
The assignee contacted me and I was instructed to deal with the review including the dispute resolution proceedings. (Unlike most surveyors, I do not charge any extra for ‘going to arbitration’ and my total fee (exclusive of VATt) was under half the amount that the previous tenant’s surveyor would’ve charged). Before the instruction was formally confirmed, the Landlord's Surveyor telephoned the assignee direct and intimated £60,000 per annum exclusive would be acceptable.
Some information was passed on to me but otherwise I started from scratch. I inspected the premises and made enquiries I considered necessary. The Independent Expert preliminary procedures were underway. I found several points in the interpretation of wording and phrasing of the lease that did not appear to have been explored, so I issued a Calderbank offer at £57,500 pa to protect my Client’s interest on costs. The Landlord would not accept the Calderbank offer, the Independent Expert was asked to proceed.
Acting as advocate, I presented the Independent Expert with submission of seventeen pages, 7350 words. Because the Landlord owns the entire parade in which 31 is located, together with numerous other shops in Notting Hill Gate, the Landlord’s Surveyor had all the evidence. One could have the impression the landlord was invincible. However, the Landlord's Surveyor was acting as expert witness; a role that, in my view, exposes a surveyor to a need for a considerably more accuracy and compliance with technical expectations. My counter-submission, twelve pages and 5400 words, followed by re-examination (five pages, 1800 words) of the expert witness surveyor’s reply.
The determination was £53,630 per annum exclusive. The landlord paid all costs of the Independent Expert.
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The assignee contacted me and I was instructed to deal with the review including the dispute resolution proceedings. (Unlike most surveyors, I do not charge any extra for ‘going to arbitration’ and my total fee (exclusive of VATt) was under half the amount that the previous tenant’s surveyor would’ve charged). Before the instruction was formally confirmed, the Landlord's Surveyor telephoned the assignee direct and intimated £60,000 per annum exclusive would be acceptable.
Some information was passed on to me but otherwise I started from scratch. I inspected the premises and made enquiries I considered necessary. The Independent Expert preliminary procedures were underway. I found several points in the interpretation of wording and phrasing of the lease that did not appear to have been explored, so I issued a Calderbank offer at £57,500 pa to protect my Client’s interest on costs. The Landlord would not accept the Calderbank offer, the Independent Expert was asked to proceed.
Acting as advocate, I presented the Independent Expert with submission of seventeen pages, 7350 words. Because the Landlord owns the entire parade in which 31 is located, together with numerous other shops in Notting Hill Gate, the Landlord’s Surveyor had all the evidence. One could have the impression the landlord was invincible. However, the Landlord's Surveyor was acting as expert witness; a role that, in my view, exposes a surveyor to a need for a considerably more accuracy and compliance with technical expectations. My counter-submission, twelve pages and 5400 words, followed by re-examination (five pages, 1800 words) of the expert witness surveyor’s reply.
The determination was £53,630 per annum exclusive. The landlord paid all costs of the Independent Expert.
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