Rent review - is time of the essence

If you are the landlord of a commercial property and fear you may have missed the opportunity to action a rent review, there is a good chance that you can still deal with the review retrospectively. The key thing will be whether ‘time is of the essence’ with the review.

If time is not of the essence, then the landlord will likely be able to action the review, even if several years have passed since the review date. But if time is of the essence, then any timing provisions will have to be strictly followed by the landlord (and tenant), or it may mean the opportunity to review the rent is missed.

Most leases will make it clear whether or not time is of the essence. Where it can get complicated is where they do not, or when time becomes of the essence inadvertently, because of the drafting of the lease.

So, with any rent review, it pays for the landlord to prepare well in advance and take professional advice on timings, and whether any particular measures need to take place for the rent review to be actionable. For example, I dealt with a review recently that required a notice to be served by a certain date, and if this was missed, the landlord would have to wait until the next review before they would have the chance again. In a rising market, with a five-year review cycle, this could be very costly.

Landlords that may not have actioned a rent review in the past should take the advice of a valuer or solicitor to see if the review can still be actioned. Even if the review date was several years ago, a skilled commercial valuer will be able to advise on what the market rent would have been at that time.

Tenants might also want to look at out of date rent reviews and take advice. A tenant might want to document previous reviews at nil increase, so that they know the landlord wont surprise them, or use a rent review as leverage when dealing with another matter. It’s a risky strategy from a tenant’s point of view though, as they might be highlighting something the landlord wasn’t aware they could do, and then find themselves on the other side of a rent review dispute.  The advice of a valuer or solicitor is highly recommended in this situation.