Rent Review & Lease Renewal – Know your rights!

Note: Most leases have an ‘upward only’ rent review clause which requires that rents can either remain unchanged or increase.  Once a rent value is determined, the new rent is payable from the date stated in the lease – NOT the date agreement was concluded, therefore please manage your finances accordingly

This is the procedure recommended by the RICS for a typical rent review:

1. The landlord will make contact 6 months prior to your review date to arrange a survey and explains the following process including the potential option for affordability review.
2. The landlord will aim to serve formal notices 3 months before the renewal date.
3. A survey is conducted to revalue the property
4. The landlord issues the tenant with a Rent Review Notice 
5. The tenant sends the Landlord a Counter Notice to state they do not agree with the valuation and wish to commence negotiations (required to be sent via recorded delivery within 28 days of the Rent Notice), failure to do this may result in the rent being increased automatically.
6. The landlord responds to the Counter Notice by sharing with the tenant the basis they have calculated the revaluation.  This must include comparable evidence of rents being paid of properties which are as close as possible to you. See list of required information the landlord must supply below.
7. The Arch Company at this stage has promised that the valuation proposed will NOT EXCEED that of their evidenced comparable rents and inform the tenant that there is an AFFORDABLITY PROCESS available to them to support them should the tenant be unable to afford the rent once the valuation process has been completed.  Please see further note about the affordability process below. 
8. The tenant at this point may chose reach out to their local tenant network or to engage an independent RICS surveyor to support them to negotiate the revaluation by obtaining stronger comparable rent evidence to support a reduction in the proposed rent.   Please see below the way in which comparable rents are ranked from strongest to weakest.  
9. If the landlord and tenant fail to reach agreement on the correct valuation for their property, they may chose to commence the process of arbitration in which an independent arbitrator reviews all the landlord and tenant evidence and will set the rent.  This process requires that the Landlord must provide all evidence of rents being paid (not just ones that might support their proposed increase).  We recommend tenants speak to GOTA and obtain their own independent professional advice.

Valuation must reflect market movement and can go up and down!

Note:  Valuations must reflect the market at the time of revaluation, rents can go up, down or remain unchanged. Once a rent value is determined, the new rent is payable from the date the prior lease expired – NOT the date agreement was concluded, therefore please manage your finances accordingly.

1. The landlord will confirm to the tenant that they are willing to renew their lease 6 months prior to lease expiry and will arrange a survey, explaining the following process and option for affordability review
2. Arch Co will endeavour to commence negotiations 3 months prior to lease expiry.
3. A survey is conducted to revalue the property
4. The landlord issues the tenant with Heads of Terms for a new lease – See what the Heads of Terms must include below.
5. The tenant informs the landlord in writing that they do not agree with the valuation and wish to commence negotiations.
6. The landlord responds by sharing with the tenant the basis they have calculated the revaluation.  This must include comparable evidence of rents being paid of properties which are as close as possible to you. See list of required information the landlord must supply below.
7. The Arch Company at this stage has promised that the valuation proposed will NOT EXCEED that of their evidenced comparable rents and inform the tenant that there is an AFFORDABLITY PROCESS available to them to support them should the tenant be unable to afford the rent once the valuation process has been completed.  Please see further note about the affordability process below. 
8. The tenant at this point may chose reach out to their local tenant network or to engage an independent RICS surveyor to support them to negotiate the revaluation by obtaining stronger comparable rent evidence to support a reduction in the proposed rent.   Please see below the way in which comparable rents are ranked from strongest to weakest.  
9. If negotiations exceed the expiry date of the lease, we advise the tenant to continue to pay rent at the existing levels whilst in occupation of the property to limit accrual of debt.