Small Business rent review

[digisatman]

Hi all,

Got my 5-year Small business (newsagent) rent review in through the post. The proposal is a 35% INCREASE .

I dont think this can be justified, any views?

Digi

[jaymanek]

who's the landlord? I assume you are leasing the unit?

[Dieselman]

What does it say in the lease contract?
35% over 5 years is about 5% per annum compound.

[Dieselman]

Originally Posted by jaymanek

who's the landlord?

Why.? Are you going to send the Boys round..??

[jaymanek]

lol, just trying to ascertain whether its a privat landlord trying his luck or someone like a local council or a larger public organisation.

[mattc]

given the current economic climate send the letter back proposing a 35% reduction!

Naturally the landlord will have you believe that there are hundreds of people/businesses waiting to fill your unit right

[davidjpowell]

Hi

You should write back and ask your Landlord for details of his floor areas and the evidence upon which he has based his proposed increase. Your first letter should be done promptly, but should leave him in no doubt that the proposed increase is not acceptable. All other letters should be labelled 'Without Prejudice'.

You should also check the terms of the lease to ensure that the review terms have been followed.

No evidence should equal no increase (assuming upward only reviews).

I am happy to give advice here or by PM if it would help. (I am a Chartered Surveyor and deal with rent reviews on a daily basis).

David

[digisatman]

local council

[jeremytaylor]

Councils sometimes have 'funny' commercial leases. But otherwise davidjpowell is spot on (I'm another chartered surveyor who deals with rent reviews on a weekly basis)

[Mudster]

When I took on my current warehouse I signed a three year agreement with fixed terms. Once that expires we renegotiate.

This seems quite normal now, the days of long leases have gone and flexibility and transparency are the name of the game now.

Plus, new laws regarding business rates on empty business property prompt landlords to offer deals and incentives to get bums on seats..I negotiated three months free and a structured deal over three years.

Local council...it's difficult to play hardball with civil servants.....

[Benzowner]

A 35% increase over 5 years is not out of the way, as said 5% per annum compounded. However, any rent review should be open to negotiation and I would suggest you contact your landlord as a matter of urgency and tell him you will not accept his offer. Our landlord actually calls into see us and we negotiate. Our last increase was 6.25% over a 5 year period.

[neilrr]

Originally Posted by Geoff2

A 35% increase over 5 years is not out of the way

In today's market I'd say it is. They're asking for the world to see what they get. They have absolutely nothing to lose by doing this as some mugs people will agree to this level of raise right off the bat.

[davidjpowell]

It all depends. If a shop next door has let close to the rent review date on a simlar lease at £x per sq m (ITZA) and the landlord has applied £x per sq m (ITZA) on the correct floor areas it would be hard to resist an increase, depending on what else has happened in the area.

ITZA means In Terms of Zone A. You effectively band the floor area, in 20ft zones from the front towards the rear. Zone A at the front is valued at 100%, the value of Zone B is 50% of front, C, 25% and remainder at 12.5%. Non retail vaues are discounted also.

Simplisitc 35% is too high, while persuasive to the tenant, are possibly not entirely accurate, and you should research actual values rather than rely on % increase.

David