1. Jennifer Slade

2.  Rent  Rent review

3.  Amount  Payment dates  Rent suspension/abatement  Payments defined as “Rent”  Interest

4.  Purpose  Periodic reassessment of rent  Valuation exercise – determined by provisions ▪ Open Market Rental Value (OMRV) ▪ RPI ▪ Turnover rent  Upwards only rent review?

5. Rising market Falling market

6. Rising market Falling market Reviewed rent (upwards only)

7.  Rent review provisions = directions to valuer  Use of “comparables”  “Hypothetical lease” is subject of valuation  Based on actual lease  Assumptions and Disregards introduced to ▪ Eliminate contingencies of actual letting ▪ Create “level playing field” ▪ Produce fair valuation?

8. Hypothetical letting: lease provisions

9. Take actual clause Widen (i.e. less restrictive)

10. Hypothetical letting: lease provisions Take actual clause Widen (i.e. less restrictive) Lease more attractive to hypothetical bidders More/higher hypothetical rental bids

11. Hypothetical letting: lease provisions Take actual clause Widen (i.e. less restrictive) Lease more attractive to hypothetical bidders More/higher hypothetical rental bids Rent inflated at review (landlords’ objective)

12. Hypothetical letting: circumstances

13. Take actual circumstances of letting/market Increase competition for hypothetical letting/adjust circumstances

14. Hypothetical letting: circumstances Take actual circumstances of letting/market Increase competition for hypothetical letting/adjust circumstances More/higher hypothetical rental bids Rent inflated at review (landlords’ objective)

15.  (a) no works … that have diminished the rental value  (b) if destroyed… Premises rebuilt  (c) L and T covenants have been performed  Is this fair to T?

16.  (d) willing landlord and willing tenant… with vacant possession  Is VP always realistic?  (e) fully fitted out

17.  (f) Hypothetical Lease contains same terms as [actual] Lease save for Initial Rent… and… any rent-free period [for fitting out]  Rent-free’s and other inducements:  Broadgate Square v Lehman Brothers  “headline rent” vs “effective rent”

18. Take a five year lease – “rent” is £100K p.a. 12 3 45

19. 12 3 45 Rent-free of 12 months

20. Take a five year lease – “rent” is £100K p.a. 12 3 45 Rent-free of 12 months £0 £100K

21. Take a five year lease – “rent” is £100K p.a. 12 3 45 Rent-free of 12 months £0 £100K Headline rent = £100K p.a. BUT Effective rent = 400/5 = £80K p.a.

22.  (f) (continued)… including provisions for rent review  (g) term of hypothetical lease  (h) (i) 1954 Act renewal / VAT recovery

23.  See s34 LTA 1954  (a) occupation  (b) goodwill  (c) improvements

24.  Experts vs arbitrators  Formalistic reviews  Time of the essence