Rent review negotiation
3 October 2026(2026-Oct: LinkedIn) What’s the difference between negotiating a rent review and doing a rent review? The short answer is that negotiating a rent review is more likely to result in a rent different to that envisaged by the lease.
Per caselaw, a rent review is for the benefit of both parties so, ideally, the parties/their surveyors should work together to establish the market rent. Invariably, tenants do not see it like that. Consequently, a negotiated settlement means that the parties’ decisions are invariably subjective.
However, a rent review is objective. The market rent (as defined by the lease) is not what the actual landlord would accept or the actual tenant could afford – such are subjective – but what a hypothetical willing landlord and a hypothetical willing tenant would agree – such are objective. [A hypothetical tenant includes the actual tenant unless expressly excluded by the lease.)
For a tenant, the money has to come from somewhere. For a hypothetical tenant, the money is there regardless. For a landlord, rental growth and investment performance are factors to consider. But, for the hypothetical landlord, so too the hypothetical tenant, per business tenancy law, the wider consequences are irrelevant. Business tenancy law is not interested in whether a tenant can afford to pay or a landlord can afford to accept.
Leases generally provide a choice of how a rent review can be done: either by agreement or decided by a third party. Agreed is likely to be based on subjective decisions. Leases do not usually stipulate how the agreement has to be reached. It is only third party procedure that is subject to the hypothetical lease.
Where surveyors tend to treat referral to a third party as the basis for negotiation, really there is no justifaction for thinking like that. Negotiation is subjective.
A perennial criticism is that a negotiated settlement on rent review is unlikely to achieve as much rent as could be obtained by letting the premises in the open market (at the review date on the same lease). Does that mean that the majority of commercial properties are underlet? Not necessarily. It depends on how the rent has been negotiated. Where the rent has been negotiated by agreement, it doesn’t matter what the parties agree. When you know how to negotiate, it is generally possible to achieve more by agreeement than would otherwise be possible.
An example of negotiation par excellence is acting for a landlord where your opposite number is an in-house surveyor of a multiple retailer. An in-house surveyor’s job is to minimise the retailer’s property costs. They want the landlord’s surveyor to provide evidence so that they can find fault with it. It is in the same vein as a trained salesperson wanting to know your reason for deciding against buying something so the salesperson can talk you out of it.
In my experience, the only way to defeat a negotiating stance contrary to one’s objective is to remove negotiation from the equation.
Return to Article