Q&A: Landlord Surprises New Tenant With £10,000 Per Annum Rent Increase
By Elizabeth Fox, Partner, Business Law Firm, Fox Williams
Question: I have just acquired a lease of a shop recently vacated by a retailer who had gone into liquidation. My landlord has served a notice on me advising that my rent is to increase by £10,000 per annum effective from March 2008. Am I really responsible for the increased amount from that date?
Answer: Unfortunately the quick answer is yes.
It is often assumed that if the rent review provisions in the lease have not been triggered within a reasonable period following the rent review date set out in the lease the landlord will...
...have lost its right to review the rent. Unless there are very specific provisions to this effect in the lease this is not the case; a landlord can trigger a review of the rent at any time after the rent review date.
Whilst the limitation period for a landlord to recover arrears of rent is six years (s.19 of the Limitation Act 1990), as regards the recovery of any additional rent due following a rent review that period of six years does not start until such time as the new rent has been determined or agreed.
Generally speaking, it can be many months or even years after the actual review date before rent reviews are agreed between the parties to the lease or, if they cannot agree, are determined by an independent expert or arbitrator. It is for this reason that most leases will provide a clear mechanism for collection of any excess rent after the review has been completed for the period from the review date until the revised rent is actually determined or agreed. Most leases will also provide for interest on these balancing payments.
Determination of rent reviews is often delayed not only whilst the parties negotiate but also... continued on page two >