When a lease is for a term of 5 years or more it is extremely likely that the lease will contain provisions to review (i.e. in practice, increase) the underlying rental figure. The purpose of this is to protect and maintain the value of the landlord’s reversionary interest against inflation, whilst ensuring that the Tenant pays the fair and market rent at that time.
The four most common types of review in practice are:
• Open Market upwards only (probably the most common form of review in practice)
• Open Market Upwards or downwards
• Fixed increase
• Index Linked
Legal advice should be sought during the negotiation of these clauses prior to completion of the lease as they have different implications for the landlord and tenant. The advice of a professional valuer should also be sought during the practical stages of a rent review.