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Delayed Rent Review

QUESTION: I acquired my first restaurant a year ago. At the time there was a rent review holding over from the previous tenant but I have heard nothing, Can this rent review be backdated or has the landlord lost its rights?

Not necessarily. The lease’s review clause should make clear when a landlord is able to serve a rent review notice, and when it is not.

For instance, the landlord has to serve a rent review notice by a certain time. However, the courts will often allow the landlord to still review the rent unless it is clear that the rent review clauses are what is known as ‘time is of the essence’. In other words, the review has to be carried out by a specified time.

In this case, there has to be either a clear statement that time is of the essence, or a strong indication that the landlord needs to have served the rent review notice by a certain date. In these cases, you will not be liable for an increase on review because the landlord will be out of time on serving the rent review notice.

However, in most leases, the landlord has flexibility in taking action on the rent review well after the review date. Nevertheless, a recent case held that an extended delay meant that the landlord missed activating the review (professional + legal, 09.12.05 p70).

In most leases however, while the landlord may still have a right to review the rent, the valuation date is fixed at the review date. As long as you have taken advice as to what appropriate rental values were at the review date and assuming that they are at, or less than, the passing rent, there should be no increase.

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