RENT REVIEW – COMMERCIAL LEASE


The rent review is usually by way of the following methods:

• fixed percent increases
• CPI increases
• to market rent.

It is common for a commercial lease to contain a clause that enables the owner to increase the current rent at regular periods and allows for arbitration or expert opinion on dispute. Usually the determination is final as under the terms of a typical lease both parties are bound by the decision of the determining valuer. An appeal to the court can only succeed if the determining valuer has made a fundamental mistake such as determining the rent on the wrong property!

The to market rent clauses are likely to encourage conflict between the parties particularly where the landlord has tried to draft the clause to exclude the effect of incentives on market rent. However, it is difficult to draft a watertight clause to achieve this aim.

The review clause may fail to provide for other matters of importance in valuation and the valuer must decide by rules of construction whether or not he/she can imply other matters not expressly dealt with. This is a question of law as well as valuation.