Commercial Rent Reviews: What Every Landlord Needs to Know

Introduction: Why Rent Reviews Matter in Commercial Property

Commercial property investment is all about maximising returns while protecting long-term value. Unlike residential tenancies, where rent is usually fixed, commercial leases often include rent review clauses. These reviews give landlords the opportunity to adjust rent in line with market conditions.

Handled well, a rent review can significantly increase income and boost the property’s capital value. Handled poorly, it can lead to disputes, undervaluation, or missed opportunities.

At Ravi Seth, we work with landlords to manage commercial rent reviews fairly, strategically, and in line with the Royal Institution of Chartered Surveyors (RICS) guidance. This ensures you get the rent your property deserves, without unnecessary conflict.

What Is a Commercial Rent Review?

A commercial rent review is a contractual mechanism built into a lease that allows the rent to be adjusted periodically during the tenancy.

• Purpose: To ensure rent reflects current market value.

• Frequency: Commonly every 3–5 years, depending on the lease agreement.

• Methods: Open market value, index-linked (e.g. tied to RPI), or fixed percentage increases.

The most common form in the UK is open market rent review, where the rent is adjusted to reflect what the property would achieve if re-let at that point.

When Do Rent Reviews Happen?

The lease sets out the rent review dates. Typically:

• Every 3, 4, or 5 years during longer leases

• Sometimes linked to inflation indexes (RPI/CPI)

• Occasionally fixed step increases (e.g. +10% after 5 years)

It’s important for landlords to plan ahead. Waiting until the review date can put you on the back foot. Early preparation allows for market research, professional valuation, and smoother negotiations.

How Are Commercial Rents Reviewed?

There are three main approaches:

1. Open Market Rent Review

The new rent reflects what the property would achieve if re-let in the open market, assuming:

• A willing landlord and tenant

• No special deals or incentives

• The same lease terms continue

This method requires evidence from comparable properties in the area – making professional valuation essential.

2. Index-Linked Rent Review

Rent is adjusted according to a price index, usually RPI (Retail Price Index) or CPI (Consumer Price Index). This gives landlords predictable increases but may not keep pace with local property markets.

3. Fixed or Stepped Increases

The lease predetermines the rent rise (e.g. +5% every 3 years). While simple, this can mean rent falls behind true market value in booming areas.

Key Factors That Influence Rent Reviews

A rent review isn’t just about square footage. Other factors include:

• Location – proximity to transport links, footfall, and business hubs

• Condition of the property – well-maintained buildings command higher rents

• Market demand – strong demand for retail, office, or industrial units will push up rents

• Lease terms – restrictive clauses (e.g. tenant breaks or repair liabilities) may reduce value

• Use class – the permitted commercial use under planning law can impact rental levels

  
  

Common Disputes in Rent Reviews

Rent reviews can become contentious when:

• Landlords aim for significant increases

• Tenants argue the market doesn’t support higher rents

• Both parties use different comparables or valuation methods

If disputes arise, the lease will normally specify a resolution method:

• Third-party determination by an independent surveyor

• Arbitration through RICS procedures

The best way to avoid disputes is to seek professional advice early and rely on clear, evidence-based valuations.

The Role of a Chartered Surveyor in Rent Reviews

Professional support is essential for landlords. A RICS-accredited surveyor:

• Provides an independent valuation based on market evidence

• Advises on the best strategy for negotiation

• Ensures compliance with lease terms

• Represents landlords in disputes if necessary

At Ravi Seth, our surveyors provide landlords with the reassurance of accurate, evidence-based advice to secure fair and profitable rent levels.

Landlord Tips for Successful Rent Reviews

1. Read the Lease Carefully

   Every lease is different. Understand the specific rent review mechanism – timing, method, and dispute resolution process.

2. Plan Ahead

   Start preparing at least 12 months before the review date. Gather market evidence and appoint a surveyor early.

3. Keep Records of Property Improvements

   If you’ve invested in upgrades, this can strengthen your case for a higher rental value.

4. Consider Market Trends

   Is demand growing for your property type? Are new developments nearby increasing value? These trends should be factored in.

5. Be Ready to Negotiate

   Tenants may resist increases. Be firm, but evidence-based, to achieve a fair outcome.

Case Example: A Retail Unit Rent Review

A landlord approached Ravi Seth for support with a rent review on a large industrial unit. The tenant argued that retail rents had fallen due to online competition.

Ravi  analysed recent lettings in the same town, showing strong demand for well-located units. Using this evidence, we negotiated an 20% rental uplift, reflecting market conditions while remaining fair. This case highlights how professional valuation ensures landlords achieve the right balance between profitability and tenant retention.

Conclusion: Protecting Your Commercial Returns

Commercial rent reviews are one of the most powerful tools landlords have to increase income and maximise long-term value. But they must be handled with care, professionalism, and evidence.

At Ravi Seth, we support landlords through the entire process – from understanding the lease to negotiating with tenants and providing expert RICS valuations. Our goal is simple: to make sure your property achieves the rent it deserves.

Do you have a rent review approaching? Don’t leave it to chance. Contact Ravi Seth today for expert advice and professional support on your commercial rent review.