There are different types of rent review provisions. The most common and therefore the focus of this article is the open market value review.
In an open market review, the rent is adjusted to the market rent assuming (hypothetically) the property would be available to let in the open market on the date of the review.
The rent reviews are normally upwards-only, so the rent will either go up or stay the same, but will never go down.
The rent review clause in the lease will set out the considerations to be taken into account (called 'assumptions') and those to be ignored (called 'disregards') for the purposes of valuation of the rent.
• The parties may agree the new rent between themselves.
• A dispute can be referred to a third party (usually a surveyor). The lease will specify whether the surveyor will act as an arbitrator or an expert.
• Once the new rent is determined, this will typically be back-dated to the rent review date. If there has been an increase in the rent, the tenant will have to pay the balance and any interest due on it, and then continue to pay the new rent.
• The parties may document the agreement in a rent review memorandum.