As lockdown measures are constantly being eased, in theory life in the UK should be returning back to some sense of normality. However as business are restarting and staff are drifting back to their places of work, many companies will be facing rent reviews which will require negotiating.
Whilst some industrial rent reviews and lease renewals have been taking place during lockdown, many Landlords have been hesitant to serve a Rent Review Notice upon struggling Tenants during these challenging times. Having delayed making proposals to review the rent as allowed within the lease, as time is usually not ‘of the essence’ we are witnessing a high volume of rent reviews being activated now, post lockdown.
Commercial leases usually allow for a rent review every four or five years and during these unprecedented times, the date of rent review is essential. Commercial properties, whether they be retail, offices or industrial are normally valued at a rent review as at the date of review documented within the lease.
Landlords who are serving Rent Review Notices upon Industrial Tenants now in relation to rent reviews which were due to take place pre-Covid 19 can benefit from valuing their properties as at the date of review.
In reality this means a Tenant is unable to argue that the impact of Covid 19 should be taken into account as this was not relevant at the time of rent review however as many will attest, unlike retail and office premises, industrial property has largely remain unaffected by the recent pandemic.
Conversely, Industrial Tenants who have had rent reviews due during lockdown and have been forced to close their units can potentially benefit from the severe impact on their businesses and furloughing staff has had. They may be able to argue substantial allowances for this when calculating revised rents should any increases be justified.
Calculating revised rent reviews during this time is not an enviable task as whilst Landlords must not force Tenants from trading due to unsustainable rents,
Tenants must also agree to the fairest rents with the Landlords and looking at recent Open Market Industrial Lettings will be the best guide.
Our advice to Landlords and Tenants, is that before activating the rent review or commencing a negotiation, do check the provisions within the lease as it is true to say, the date matters!
