The Rent Review Specialist
Concurrent complex submissions
14/11/2023
Every so often, a rent review is referred to an arbitrator or independent expert, depending upon the dispute resolution procedure in the lease. And, every so often, depending upon whether I am acting for the landlord or the tenant, the dispute resolution procedure requires me to comply with a timetable for submissions and counter-submissions or reports and replies depending on whether I am acting as an advocate or an expert witness. Such submissions or reports are never short: generally, I write approximately 20,000 words, followed by another 10,000 or so for the counter-submissions or replies.
Unless instructed at the dispute resolution stage, I rarely charge extra for “going to arbitration”. Concentrating on carefully crafted writing is so demanding that time slips by. Usually, referrals, as the dispute procedures are known by, occur occasionally, but recently, I have been dealing with two concurrently—one for a landlord of a trade counter and one for the tenant of a nightclub.
Usually, my typical working day is from about 09:00 until 19:00, but two referrals took them until 22:30 and the last few days of one until 23:45 on a Sunday. 12-14 hours working days is exhausting but satisfying; fortunately, I sleep well. I thanked the nightclub client for what I have found the most challenging referral I have dealt with in my entire career: I suppose, too, I should thank the landlord - for had it not been for the landlord’s desire to double the rent of premises of the Government’s enforced closure from the start of Covid-19 lockdown 1 in March 2020 until July 2021 the opportunity to exercise my skills to the limit might never have arisen.
Unless instructed at the dispute resolution stage, I rarely charge extra for “going to arbitration”. Concentrating on carefully crafted writing is so demanding that time slips by. Usually, referrals, as the dispute procedures are known by, occur occasionally, but recently, I have been dealing with two concurrently—one for a landlord of a trade counter and one for the tenant of a nightclub.
Usually, my typical working day is from about 09:00 until 19:00, but two referrals took them until 22:30 and the last few days of one until 23:45 on a Sunday. 12-14 hours working days is exhausting but satisfying; fortunately, I sleep well. I thanked the nightclub client for what I have found the most challenging referral I have dealt with in my entire career: I suppose, too, I should thank the landlord - for had it not been for the landlord’s desire to double the rent of premises of the Government’s enforced closure from the start of Covid-19 lockdown 1 in March 2020 until July 2021 the opportunity to exercise my skills to the limit might never have arisen.
Negotiation
01/01/2014
Contrary to popular belief, there is, assuming the review to market rent, no right or wrong way to negotiate a rent review. The tenant may like to assert that the landlord should produce evidence to justify a proposed increase and if none were forthcoming then the rent should not go up, but that stance has no basis in law. On the contrary, a principle of business tenancy law is that a rent review is for the benefit of both parties, so co-operation is called for.
In United Scientific Holdings v Burnley Borough Council (1978), Lord Salmon said: “To my mind, it is totally unrealistic to regard such clauses (rent review) as conferring a privilege upon the landlord or as imposing a burden upon the tenant. Both the landlord and the tenant recognise the obvious, viz., that such clauses are fair and reasonable for each of them. I do not agree with what has been said in some of the authorities, namely, that a rent revision clause is for the benefit of the landlord alone and not at all for the benefit of the tenant. It is plainly for the benefit of them both. It is for the benefit of the tenant because without such a clause he would never get the long lease which he required; and under modern conditions it would be grossly unfair that he should. It is for the benefit of the landlord because it ensures that for the duration of the lease he will receive a fair rent instead of a rent far below the market value of the property which he demises. ”
A review ensures the tenant is not subsidised. Even so, tenants rarely see it like that; and, for many, the only way the business can remain profitable is when costs are below the going rate. A business plan is rarely straightforward, and with the gap widening between retailers that have what customers want, and those that do not, retailers not on the receiving end of profitable demand are often fighting to preserve an outmoded business model. When the survival of the tenant’s business depends to a large extent upon the landlord not wanting any (hefty) increase, the tenant’s reaction to a proposed increase is much more likely to be emotional, than dispassionate. What might be described as 'woolly-headed liberal thinking' has entered the popular fray but retailing is not an extension of social services. A tenant’s failure to adapt its business style to changing circumstances cannot possibly be something for which the landlord should be expected to share responsibility. It is not a fault of landlords that rents have become uneconomical for some retailers, but a function of the market, which includes competition from other retailers, consumer spending-priorities, rental valuation methodology, and tenants straying from review guidelines.
In United Scientific Holdings v Burnley Borough Council (1978), Lord Salmon said: “To my mind, it is totally unrealistic to regard such clauses (rent review) as conferring a privilege upon the landlord or as imposing a burden upon the tenant. Both the landlord and the tenant recognise the obvious, viz., that such clauses are fair and reasonable for each of them. I do not agree with what has been said in some of the authorities, namely, that a rent revision clause is for the benefit of the landlord alone and not at all for the benefit of the tenant. It is plainly for the benefit of them both. It is for the benefit of the tenant because without such a clause he would never get the long lease which he required; and under modern conditions it would be grossly unfair that he should. It is for the benefit of the landlord because it ensures that for the duration of the lease he will receive a fair rent instead of a rent far below the market value of the property which he demises. ”
A review ensures the tenant is not subsidised. Even so, tenants rarely see it like that; and, for many, the only way the business can remain profitable is when costs are below the going rate. A business plan is rarely straightforward, and with the gap widening between retailers that have what customers want, and those that do not, retailers not on the receiving end of profitable demand are often fighting to preserve an outmoded business model. When the survival of the tenant’s business depends to a large extent upon the landlord not wanting any (hefty) increase, the tenant’s reaction to a proposed increase is much more likely to be emotional, than dispassionate. What might be described as 'woolly-headed liberal thinking' has entered the popular fray but retailing is not an extension of social services. A tenant’s failure to adapt its business style to changing circumstances cannot possibly be something for which the landlord should be expected to share responsibility. It is not a fault of landlords that rents have become uneconomical for some retailers, but a function of the market, which includes competition from other retailers, consumer spending-priorities, rental valuation methodology, and tenants straying from review guidelines.