Rent Review – Avoid Taking on old leases!
A lot of shops are vacant now and will be advertised for letting over the summer.
Many of these stores will have old leases in place and could be offered to a new tenant by way of Assignment of the lease to the new party.
This should be avoided at all costs and a prospective tenant should ask for an entirely new lease from the landlord if possible.
Why? Because an old lease will invariably contain Rent Review clauses under which any review of rent can only be upwards. Under an old lease, the rent can be reviewed and fixed at the same rate as the old rent and therefore the rent remains static. However, it cannot be reduced even if market conditions suggest otherwise.
A store owner who took over an old lease could, all too easily, be paying double the rent than a neighbouring storeowner who was granted a brand-new lease with a rent reflecting today’s more challenging condition.
These changes came into effect in February 2010 when “Upwards only” rent review clauses were abolished. After this date, all new leases must contain the more tenant friendly clauses under which the reviewed rent may of course be increased but also under which it be decreased to reflect market conditions.