GENERAL ADVICE FOR TENANTS
1. Is Network Rail doing something new or different?
Yes, many tenants have informed us of threatened rent increases of huge amounts (100% to 364%),
this is new and different behaviour from Network Rail that has not been experienced in the past by
these tenants, some of which have been there for decades.
The majority of the Network Rail commercial portfolio is in the process of being sold to a single
purchaser. They are therefore internally under pressure to drive rents upwards and limit any voids
across the portfolio in order to secure a higher capital sale price.
2. What to do when you get a letter from Network Rail saying “Rent Increase Notice” / “rent
Review” or “Lease Renewal”:
You have to respond, objecting to the rent increase, within a limited time, the time limit will be
written on the letter and in your lease.
Failure to respond correctly and within the given deadline may result in being stuck with the rent
increase. A Counter Notice should be sent to the landlord via Recorded Delivery post and headed
‘Counter Notice’. An email will not suffice. The letter Counter Notice should make it clear that you
object to the new rent being proposed and that you invite the landlord to negotiate with you. You
can also pass the letter on to your appointed Surveyor to deal with this on your behalf but be sure
to do so straight away in order to give enough time to respond within the time limits set out within
the lease.
3. How is the rent negotiated?
The rent review process will be specified within the lease and this is usually by way of open
negotiation but is based on comparable transactions, taking into account your specific lease terms,
location, specification, tenant’s improvements and other factors.
The rent can be negotiated directly between the Landlord and the tenant or alternatively each party
may appoint their own representative to act on their behalf. Network Rail would usually undertake
the smaller and more straight forward negotiations themselves, whilst the larger more contentious
transactions would usually be outsourced to a firm of Surveyors.
If the respective parties cannot agree the new rent amicably, either party may refer the matter to
the RICS for the appointment of an independent Third Party to determine the new rent. This process
can be very expensive and the outcome is uncertain.
4. Comparables, what is that?
‘Comparables’ is the term used to describe the market transactions relied upon to agree the new
level of rent. These comparable transactions could be an Open Market Letting, Lease Renewal, Rent
Review or Third Party Determination. The type of transaction will also carry different weight to be
applied when assessing the new rent.
It is important to note that there are a number of valuation considerations to take into account
when assessing these comparables, which will also determine whether they are even comparable at
all.
Your landlord will or should put forward supporting comparable evidence of the rent he is seeking
and it is up to you or your surveyor to analyse and verify this information and to seek your own
comparable evidence in order to best negotiate your case. Your landlord will naturally put forward
the rental evidence that suits him and so it is always advisable to carry out your own research or
appoint your own surveyor in order to act in your best interests.
It should not be assumed that your rent will automatically increase as this will depend on whether
the comparable evidence justifies it. The lease will usually dictate that the rent cannot be decreased
at rent review so if the comparable evidence shows a lower rent than that which you are currently
paying, your rent would stay the same. It should be noted however, that at lease expiry/renewal, the
rent can go upwards or downwards.
5. Can they back date rent increases?
Yes, nearly all the leases say “time is not of the essence” in relation to rent increase notices which
means they can ask for the increases from review date date in the past. In some cases they have</h3>
asked for increases back dated several years in the past.
In some instances, it may be possible to negotiate that some of the back dated rent is waived but
this is on a case by case basis. The best way to ensure that you will not be subject to a back dated
rent increase is to check your lease and instigate any forthcoming or outstanding rent reviews.
Your surveyor will also be able to assist in reviewing your lease and advising on any future or
outstanding lease events and can diarise this so as to keep on top of impending events.
Understandably, businesses do not like to think about their rent being increased and so tend to put
it off, however, if it is dealt with proactively, this will save money and stress later on.
6. Secure Tenure. What is that?
Your lease may not say so but you may have a protected lease under the Landlord and Tenant Act
1954, giving you Security of Tenure.
The general rule is if your lease does not mention it you are most likely covered by the act.
2If you have a lease that rolls over with no fixed date, this is likely to give rise to a periodic tenancy If
you did not have the protection of the Act under your fixed term lease, you may have acquired it if
the lease rolls over without anything having been said. If you do have a protected lease, this
generally means that you have the automatic option of being able to remain in occupation on expiry
of the lease (and requesting a new tenancy). However, there are still a number of prescribed
grounds on which the landlord can object, including persistent late payment of rent, breaches of the
lease or demonstrating an intention to redevelop.
Network Rail have just about stopped allowing secure tenure on all new leases It is an important
and sometimes valuable right, find out if you have it – and if so make sure you understand the
process you and NR needs to go though in granting you a new lease.
7. What should I do?
Speak to the other tenants in your area and see if you can share information and advice amongst
yourselves.
Join our group and benefit from joining forces.
Seek professional advice, especialy that of a qualified RICS surveyor who is experienced in
negotiating commercial rent reviews and lease renewals. The money they can save you should far
outweigh their professional charges and in addition you will receive sound strategic advice
concerning your lease.
8. RICS Surveyor, whats that?
The Royal Institution of Chartered Surveyors is the proffessional organisation that governs and
regulates surveyors who provide property advice and related services such as valuation, consultancy
and negotiation.
Always check that your surveyor is currently registered as qualified by checking here:
http://www.rics.org/uk/find-a-member/
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3The following professional service providers are are currently working for some of our members and are
recomended by them:
RICS Surveyors
Panikkos Euripides MRICS
I am a Chartered Surveyor with 14 years experience in representing Commercial Tenants in relation to all
lease matters, including Rent Review, Lease Renewal and Strategic Advice.
I run my own Property Consultancy, Windsor Grange, based in London. We offer clients a complete service,
ensuring that their best interests are looked after.
I have and continue to represent several Tenants of Network Rail and am always surprised by the stance
that Network Rail takes towards its Tenants. It appears that more and more, this unique Landlord is taking a
very short term approach to its tenancy structure, thus making it more and more difficult for its tenant’s to
effectively plan for their business growth. All this under the back drop of increasing rents and fixed cost
pressures for Tenants.
In an ideal world, we would see a more transparent and flexible approach to leasing, giving Tenants a better
chance of investing in and growing their businesses. In the absence of this, we will always be on hand to
advise and where required to negotiate the best possible terms on their behalf.
Panikkos Euripides MRICS
Windsor Grange
51 Great Portland Street
London W1W 7LF
020 3151 9717
07743 646007
Panikkos@windsor-grange.com
www.windsor-grange.com
Link to RICS membership
http://www.rics.org/uk/find-a-member/?sd=y&cc=GB&fn=Panikkos&ln=Euripides&ct=
4Legal Advice
James Hanham – Barrister
James’s principal area of practice is real estate related litigation and advice concerning all aspects of
commercial/residential landlord and tenant and real property matters.
In the last year, James has appeared in the Court of Appeal, the High Court, the County Courts, the Upper
Tribunal (Lands Chamber) and the First-Tier Tribunal (service charges and leasehold enfranchisement). He
undertakes all types of hearings and is equally as comfortable before the Applications Court as he is
conducting a lengthy High Court trial. He is also instructed on arbitrations, under the Arbitration Act 1996,
ICC or LCIA Rules. Frequently, James will be instructed in the mediation process.
He read history at Oxford before taking a first class law degree at City University, London. He was a
Harmsworth scholar of the Middle Temple and began practice in the Temple before moving to 9 Stone
Buildings in 1999, from where he joined Maitland in 2008.
Memberships
Chancery Bar Association
Property Bar Association
Qualifications
MA(Oxon); LLB(London)
Maitland Chambers
7 Stone Buildings
Lincoln’s Inn
London WC2A 3SZ
T +44 (0)20 7406 1200
F +44 (0)20 7406 1300
DX LDE 326
clerks@maitlandchambers.com
jhanham@maitlandchambers.com