Landlords: Top tips for rent reviews and lease renewals

As a landlord, utilising key dates within your lease is important to ensure you maximise the return from your property and the lease.

Here are our top tips for landlords to help guide you through the process:

Lease renewals

  1. Start Early: For leases within the Act you should be reviewing the market at least 18 months out to ensure you serve your s.25 notice with the appropriate notice period. If the tenant does not have Security of Tenure make sure you have a plan at expiry to maximise long term income and limit the possibility of a tenant securing a protected tenancy.
  2. Maximise your market knowledge: Understanding the market evidence guarantees you achieve the best rent for your asset. It also ensures that there is not an overreach in a rental proposal which could risk a tenant vacating. Market knowledge will drive your property decisions.
  3. Manage the s.26 Notice: When a tenant issues a s.26 notice ensure you review and decide your strategy quickly. Landlords have two months to issue a counter-notice if they wish to oppose renewal.
  4. Understand your asset: Make sure you have a long-term asset plan – do you want to renew your lease with the tenant, or do you want the tenant to vacate in order to redevelopment, occupy or refurbish the property? Act swiftly if you wish to oppose renewal of the lease and ensure you plan accordingly.
  5. Maintain good tenant relationships: An amicable negotiation will deliver the best outcome when renewing your lease. A good relationship between the parties secures income over the term and reduces costs when concluding negotiations (removing the need to go to County Court).
  6. Energy Performance Regulations: Throughout the evolution of Minimum Energy Efficiency Standards a clear agreement with the tenant regarding sustainable improvement works ensures reduced disputes throughout  the new lease.

Rent reviews

  1. Start Early: Early preparation for rent reviews means there are no nasty surprises within the review clauses and that all relevant deadlines are met. A holistic view of the lease can be used to ensure maximum leverage is used during the review.
  2. Tactical negotiations: In a rising market, delaying the start of the negotiations will mean the best evidence can be used. However, be mindful of any ‘time of the essence’ clause.
  3. Value the rent in line with the hypothetical term: Establishing the effective market rent requires detailed knowledge of the evidence. However, you must value the rent in line with the hypothetical term.
  4. Know your evidence: Ultimately, maximising your rent income requires you to know the market and the comparable evidence. Without this information you will have a weak negotiation position during a rent review.
  5. Protection from costs: If the tenant is not forthcoming in reaching an agreement, don’t be scared to use third party determination to ensure you achieve the right outcome. However, consider the use of Calderbank offers to limit your costs.

© Cluttons LLP. 2024. This publication is the sole property of Cluttons LLP. and must not be copied, reproduced, or transmitted in any form or by any means, either in whole or in part, without the prior written consent of Cluttons LLP. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Cluttons LLP does not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication. We strongly recommend that you always seek advice and presentation from a suitable qualified professional on any matter.

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Jack Spreadborough

Associate, lease advisory and compulsory purchase

T +44 (0) 20 7647 0857
Jack Spreadborough
Contact

If you do not wish to receive further communications from us, please email [email protected]. More details on how to opt out can be seen in our Privacy Policy.

Chris Jakes

Partner, head of lease advisory and compulsory purchase

T +44 (0) 20 7647 7276
Chris Jakes

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