Rent Review - Time of the Essence

Acting for a trustee of a restaurant property in East London, I was instructed to advise and take over negotiations for a rent review where the landlord's previous surveyor had failed to serve a valid notice and the tenant's surveyor had questioned the effective date of the review. The trustee's solicitors had sought to remedy the situation by serving a fresh notice but overdid it by including wording that strayed from the lease; the tenant's surveyor was also questioning the validity of the second notice.

According to the lease, the landlord has the right, on giving the tenant at least one month’s notice, to review the yearly rent, the revised rent to be payable from the review date. If the rent had not been reviewed at a date of review then the landlord shall at any time thereafter have the right to review the rent, upon giving not less than one month’s notice in writing, and from the date specified in that notice (not earlier than one month from the date of service of the notice) the yearly rent shall be increased at the date specified in that notice.

The timing of the landlord’s notice in the first instance was not of the essence, but it could be reasoned the subsequent procedure for giving notice renders that first instance of the essence. Only the landlord had the right to start the review procedure, but business tenancy law provides a means for the tenant to force the landlord to start or lose the right. Also, there was a similarity with the situation in H Turner & Son Ltd v Confederation Insurance Co (UK) Ltd and another [2002]. In Turner, it was held that the provision for service of a late rent review notice after the end of the period of the ‘main’ rent review notice made time of the essence in relation to the ‘main’ notice.

It would have been possible for the draftsman of the lease to avoid time of the essence simply by using different wording. To have two separate procedures struck me as cumbersome. My own view is the subsequent procedure, apart from overcoming the situation had the first procedure not been followed, may have been intended to benefit the landlord to time the implementation of the review to the state of the market then prevailing and, since that would be to the detriment of the tenant, the benefit for the tenant in agreeing is that the increased rent would not be back-dated to the first instance review date. However, that would pre-suppose the valuation date would also be the date specified in the subsequent notice. Assuming the time of the first instance notice is of the essence, the right to review the rent at the express review date would be lost if notice were not given in time.

Rather than get embroiled in the legalities and the risk to the landlord of losing the right to review entirely, I persuaded the tenant's surveyor to drop the challenge of validity in exchange for the later review date.