Acting for the Landlord of 384 Green Street, Upton Park, London E13, which is let to Boots, I have obtained approximately 31% increase at rent review 24 June 2008.
In a corner position, at the junction with Harold Road, and close to Upton Park Station, the property is a ground floor shop with ancillary accommodation on two floors above. It also has on-site parking for 1-2 vehicles in its own yard. The trading position is amongst the finest, with Peacocks, Iceland and Tesco Metro a few doors along in the same parade.
The review was referred to arbitration. In my submission, I opined Zone A £60. During the proceedings, evidence of the letting to Habib Bank in the same parade was examined in detail and I suggested 10% deduction which reduced the Zone A to £54. So, whilst I think the award at Zone A £50 a little low, because Zone A £60 had been achieved nearby, at the end of 2007, involving an unrepresented tenant; and local opinion suggested around £70 elsewhere, gathering the evidence into a form suitable for carrying much weight or meaning was not possible, so I was unable to comply with the Arbitrator's directions in some respects. Upton Park is notoriously an area in which reliable and/or meaningful evidence is hard to come by.
The tenant's expert witness surveyor was of the opinion the rent should not increase and cited evidence of 2005 reviews at Zone A £38.75 in the same parade. I disagreed with that as evidence because it involved large stores which, in my experienced, are normally valued overall, rather than in zones. Also, a contention that because Zone A £41 had been agreed a year before letting the premises to Habib Bank was discounted, because it is not unusual for a negotiated settlement to be less than the Zone A level after exposure to the market.
The investment remains slightly reversionary, because, assuming all other factors remaining constant, on expiry of the lease in 2013 a 5% allowance for the hypothetical term would not apply, so the rent would go up by another £2000 pa or so.
I am particular happy about a couple of points. There are 4 advertising panels on the return frontage for which at previous reviews the tenant had resisted paying. This time, I got £250 a year.
Also, I managed to convince the arbitrator that evidence of rent on a sale-and-leaseback, when the investment is offered for sale in the open market, must contain some element of realism, so should not be disregarded. Since HSBC had sold at auction a leaseback of its branch at 349 Green Street in March 2007, the Zone A rate was assessed at £45 Zone A.
My Client bought the investment in 1988 when it was offered for sale by auction on a sale-and leaseback, with 5 yearly rent reviews. Because of the difficulty over the years experienced by other landlords and their surveyors, not just me, in finding hard evidence because of a paucity of new lettings to show proper increase, the rent has never previously gone up by much. Although the revised rent is just over double what it was in 1988 and at each review there has been some increase, this is the first time since 1988 the rent has been assessed objectively and the increase approximately 30%