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Avoiding Back Rent






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It can be tempting for a Tenant to allow the date of rent review specified in the lease to both come and go with the faint hope the Landlord will have forgotten to potentially increase the rent.

Whilst it is true that on rare occasions, a Landlord may be remiss and some tenants have the immense luck to continue paying the passing rent which may be outdated and suffer no increase, it is fair to say however that these cases are the exception and most certainly not the rule.

There are a plethora of reasons why a Landlord may allow the rent review to pass without serving notice on the Tenant at the date of review however the three most common reasons are either due to the property being over-rented and no increase is justified, the landlord is waiting for new comparable evidence to strengthen their case or more commonly and simply, because the Landlord has just not yet had time to deal with the property however rest assured, they will do so on a later date.

The vast majority of leases where time is not of the essence allow for the Landlord to serve a rent review notice on the Tenant at any point after the review date. This may be a month, a year or perhaps several years later and the consequences can unfortunately be crippling to a Tenant.

When serving a retrospective notice, despite the fact the rent must be calculated according to the value of the property at the time of rent review, this often does not prevent substantial rent increases which in turn will be back dated by the Landlord to the time of rent review. As soon as Memoranda are signed documenting the new rent an invoice for back rent will be presented to the Tenant.

As a result, a Tenant can be faced with thousands of pounds of back rent which have not been budgeted for and could potentially be suffocating to any business.

My message is therefore simple. Do not rely on luck and ignore your rent review. The prudent way forward is to trigger the rent review at the correct date if the Landlord has not already done so and ensure any back-rent payable is kept to a minimum.

Copyright 2017 Richard Lionel