The Retail Leases Act 1994 attempts to correct the power imbalance traditionally existing between landlords and tenants. This is seen in relation to market rent reviews.
When rent is to be reviewed by reference to current market rent in a retail lease, either the landlord or tenant must suggest a new rental to the other party in writing at least 60 days before the rent review date.
If parties are unable to reach an agreement at least 30 days before the new lease is due to commence, the Retail Leases Act states that current market rent will be determined by a specialist retail valuer. The valuer can either be agreed to by the parties or appointed by the Tribunal.
Parties have 14 days from the date that they receive notice of appointment of the valuer to make written submissions about what they believe the current market rent is and why.
Considerations the valuer should consider include:
- the rent that the landlord could expect to receive if the premises was unoccupied and put onto the open market;
- the advantages and disadvantages of the property as a whole; and
- the tenants use of the premises.
The valuer has one month from the date of acceptance of the role to decide what the current market rent is. The decision made is final and binding.
Obtaining an independent valuation is a time consuming and expensive process, (the cost of which is born by the parties equally) and should be used as a measure of last resort.
It is particularly important to be proactive in a market review situation from a Landlord’s perspective, as if negations fail and neither party seeks a valuer to be nominated before the next rent review date passing, the rent will not change.
At Everingham Solomons we have the expertise to assist both landlords and tenants when carrying out a rent review, as well as with any other retail lease concerns.
If you have any questions regarding retail leases, please do not hesitate to contact the experienced team at Everingham Solomons because Helping You is Our Business.
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