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As a landlord, it’s essential to understand the concept of a rent review. This article will explore what a rent review is, its importance, how it’s conducted, and how often it should be completed.
What is a Rent Review?
A rent review is a process whereby the fee paid for a property is adjusted periodically to reflect the current market value of that property. This process typically takes place in leasehold properties, and it’s an opportunity for landlords to increase the rent they receive from tenants or for tenants to renegotiate a fair rent.
They are crucial for both landlords and tenants. For landlords, it provides an opportunity to increase the rental income which is essential in maintaining the property, paying for repairs, and ensuring a fair return on their investment. For tenants, it’s an opportunity to ensure that they are paying a fair rent that reflects the property’s current market value.
How is it Conducted?
A rent review is usually conducted by a surveyor or valuer who will consider a range of factors, such as market rents, location, and the condition of the property. The surveyor will produce a report that sets out their findings, and this will form the basis for any negotiations between the landlord and tenant.
There is a clause that is included in a lease agreement that sets out how the rent will be reviewed during the term of the lease. This clause will typically specify the frequency of reviews, the method for calculating any increases, and the notice period required to initiate one.
How Much Can a Landlord Increase Rent?
The amount that a landlord can increase rent will depend on a range of factors, such as the terms of the lease agreement, the local property market, and the condition of the property.
A fair rent increase in the UK will depend on a range of factors, such as the local property market, the condition of the property, and the terms of the lease agreement. However, in general, a fair rent increase will be one that reflects the current market value of the property.
There are specific types of reviews that may apply in certain situations. One such type is the commercial rent review which is conducted for commercial properties such as office buildings, retail spaces, and warehouses. Commercial rent reviews may involve more complex considerations, such as the tenant’s profitability, the local business environment, as well as the condition of the property.
This is a formal notice that either the landlord or the tenant must serve on the other party to initiate a rent review. The notice must comply with the terms of the lease agreement and any relevant legislation, and it must be served within the specified notice period.
What is a Rent Increase Notice?
Similarly, the rent increase notice is a formal notice that the landlord must serve on the tenant to inform them of a rent increase. The notice period for a rent increase will depend on the terms of the lease agreement, but in most cases, the landlord must give the tenant at least one month’s notice before the increased rent is due.