sbh.uk - General Other - Rent Reviews

Date: 09 Jan 2002

UK logistics businesses and companies with dedicated warehouses could be losing millions of pounds each year by failing to tackle rent reviews head on, according to Colin Tucker, rent review surveyor with distribution property specialist sbh.uk. "UK businesses already pay some of the highest rents in Europe and face hefty increases every five years largely through ignoring the issue until it's too late."

Landlords often issue rent review documentation months after the due date, particularly in a rising market. But according to sbh.uk, most businesses take little or no action until the documentation arrives, which puts them at a disadvantage when negotiations start.

Tucker explained: "The landlord has one clear objective, which is to maximise rental income and devotes time and energy to planning the renegotiation strategy. Faced with other priorities, tenants leave their defence until the last minute and have little chance against the landlord's well-planned attack.

Where the landlord owns several properties in an area such as on a business park, he can pick off neighbouring businesses one by one and each successful negotiation raises the going rate, which strengthens his hand for the next review. Yet many companies are reluctant to talk to their neighbours to counter the landlord's manoeuvres. By consulting local businesses on behalf of a client for a recent rent review, sbh.uk was able to reduce the proposed rent by around 20%, a saving of £1.25 million over five years."

As well as recommending the use of an experienced property consultant like sbh.uk, who only work for client occupiers and not for landlords, Colin Tucker has some other tips to help redress the balance. Read the lease terms and conditions carefully, which may highlight some useful factors in your favour; beware of tenant's improvements, which can be used to justify a higher rent; and consider how specialised the building is for your purpose, as this may affect its rental value. Above all, plan and prepare your strategy well in advance do not wait until after the review paperwork arrives.

Related website: sbh.uk

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