Case Law and Rent Review
11 May 2025(2025 May) – From Sir John Ritblat’s remark that property investment is 50%, property, 50% finance. I decided that rent review is 50% valuation, 50% case law. As ‘the’ specialist (not ‘a’ specialist as an arbitrator in the North of England said in a reasoned award and whose putting me in my place still irks!), I rely a great deal on case law, sometimes so much so that valuation is 25%.
Considering a thorough knowledge of case law is needed to do a rent review properly, I find it fascinating how little if any is cited by other surveyors in expert witness reports. Perhaps they think that simply applying the principles without mentioning the source is enough. The popular and useful (in my opinion, overpriced, given much of its content is freely available) Handbook of Rent Review contains a digest of case law referred to in its text. But in my opinion, there is no substitute for the real thing, so prefer the actual law report to complement. At least HRR has something, unlike Woodfall and Landlord and Tenant Factbook. I used to subscribe to Woodfall – in my opinion, better value for money overall than even LTF – until its price increased beyond my needs.
Case law comes into its own, for example, when defining “hypothetical willing tenant”. Unless expressly excluded in the lease, the actual tenant is also a hypothetical tenant. Reasoning that the actual tenant wouldn’t want the premises if it did not have them already is a non-starter. As for basing an opinion on an asking rent subject to contract, such is normally dismissed as not evidence, even though typically a rent review is about what the rent would be if the premises were available to let in the market.
As “comparable evidence” is a legal term, one of the respects, among the like-for-like as far as possible, includes the terms and conditions of the lease compared to the lease of the property in question. It is not enough to rely on pro forma as they are often lacking in detail and, sometimes unbeknown to the signatory, material facts.
The first and only time since that I dealt with a rent review in the lease of a residential property let on a business tenancy for use as a house in multiple occupation, had it not been for my knowledge of case law I would have been unable to defeat the tenant’s expert witness surveyor’s opinion that the size of a bedroom was below the legal minimum requirement for use as a habitable room.
The typical ploy by surveyors when acting for tenants, and tenants themselves, of insisting the landlord’s surveyor provides evidence in support of a proposed increase in rent – or if not, then no increase – is nonsense. Case law comes to the rescue, so even if the tenant’s surveyor is unconvinced, a third party would be.
A difference exists between doing rent reviews and specialising in rent reviews. And a subtle difference exists between specialising in rent review and being a specialist in rent review.
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