Dear Claire – September 2017
21 / 09 / 2017
Perplexed by property law? Relax, Solicitor Claire Haynes is here to answer your most pressing questions…
Q: My lease lasted for 10 years and three months. There were rent reviews at year five and year 10. The landlord carried out the rent review at year 5 but I heard nothing about the rent review at year year 10 before I moved out at the end of the contractual term of the lease. This was two years ago, but last week I got notice that my landlord wants to carry out the year 10 rent review. Can my landlord do this and why would he bother after all this time? The premises have since been let to someone else.
A The reviewed rent sets a benchmark for future lettings in the building, so it will be important to the landlord as it can be used as evidence that the building commands a higher rent.
Whether the landlord can now rightfully exercise the review will depend on the wording of the rent review provisions of the lease. Provided that there is no requirement for the landlord to serve a notice to implement the review and time is not expressed to be “of the essence”, it is likely that the landlord is entitled to exercise the review.
When entering into the lease you agreed to all of the terms, which included future payment of the reviewed rent and so the landlord is now seeking to exercise its right. The fact that it is some years after the review does not prevent the landlord from doing so.
It is also usual for rent review clauses to entitle the landlord to charge interest for the period from the review date until the reviewed rent is paid, so you can expect the landlord to demand interest on the reviewed rent.
There is limited caselaw on this point. However a case from the 1980s ruled that even when the tenant enters into a deed of surrender, liability to pay rent determined under a review clause in the lease was not destroyed or discharged by the surrender after the review date. The tenant’s duty to pay the increased rent was correlative with the right to possession during that period so the landlord was entitled to the higher sum claimed.
In a rising market landlords may be less keen to settle rent reviews quickly, however when rents are falling back dated rent reviews preserve income for the future. Notwithstanding this, the review should be carried out to reflect the rent payable on the review date and so the timing of the review shouldn’t impact on the outcome of the review.
In future, as tenant you should settle rent reviews as quickly as possible. Where there is to be no increase in the rent, obtain written confirmation that the rent is to remain the same and the landlord has waived its right to carry out the review at a later date.