Top tips for negotiating a commercial rent review

What is a commercial rent review? 

A commercial rent review is a provision in a lease that sets out when and how the rent will be reassessed. It defines the mechanism for adjusting the rent, with the outcome agreed upon by the landlord and tenant or determined by an independent expert. 

Commercial rent reviews typically occur every three to five years and are usually triggered when the landlord issues a formal notice. The most common types of rent reviews include:

• Open market review - The rent is reassessed based on the amount the property would achieve on the open market at the time of the review. The landlord and tenant will attempt to negotiate a mutually agreeable amount based on the rent of comparable properties in the area, often with advice from commercial surveyors. 

If they cannot reach an agreement, they can appoint an independent surveyor or an arbitrator to determine a fair market rent.

• Index-linked review - The rent increases in line with an index, such as the Retail Price Index (RPI) or Consumer Price Index (CPI), as specified in the lease. Disputes are less likely in this case, as the rent adjustment is based on a clear, objective formula rather than negotiation or market comparison.

• Stepped rent review - The lease may include pre-agreed fixed increases that occur at set intervals, such as annually or every few years, regardless of market conditions. Although the increases are predetermined, it is still technically considered a form of rent review.  

In theory, rent reviews should allow the cost of a commercial lease to increase, remain the same or decrease, in line with market conditions. However, leases often include ‘upwards-only’ clauses to prevent the rent from falling. 

Understanding the specific clauses within your lease is crucial, as they will determine the procedure and timing of rent reviews. The lease may also include more specific clauses, such as whether maximum/minimum limits apply (known as cap and collar limits) to prevent rents from falling or rising too sharply.  

Preparing for a commercial rent review

Being well-informed, understanding your lease terms and knowing when to seek professional advice can help you approach lease negotiations with confidence. Here are some practical tips to help both parties prepare. 

Understand the rent review process

Before a rent review, make sure you fully understand your lease and the terms that determine how the rent will be assessed. You should familiarise yourself with the calculation method, any assumptions that must be applied and the process for resolving disputes.

Knowing what to expect will help you plan your strategy, gather the right evidence and approach the negotiations in an informed and realistic way. That will set the foundation for a smoother process and help you avoid any nasty surprises.

Research the market

Market evidence plays a crucial role in open-market rent reviews, with comparable properties used to assess what a tenant would pay for a property of a similar size, location, condition and permitted use on the open market.

As a landlord, you’ll look for evidence that supports a higher rental value, while tenants will want to see examples of comparable properties at lower market rents. Making sure you analyse the differences between properties, such as location advantages or building condition, as well as the similarities, will help to strengthen your argument.

Seek professional advice

if the terms of the rent review are clear, for example, any rise is directly linked to RPI, then professional tenant or landlord representation may not be necessary. However, where the wording of the lease is technical or where reassessments are open to interpretation, seeking professional advice can help to protect your interests and strengthen your negotiating position. 

Many landlords and tenants choose appoint chartered surveyors who specialises in commercial property valuations to represent them during the process. They can gather and analyse market evidence, interpret lease clauses, present a structured case during negotiations and engage in with the other party on your behalf. 

If negotiations fail, surveyors can continue to represent you in formal dispute resolution processes such as expert determination or arbitration.

Commercial rent review tips for tenants

As well as our general guidance, there are specific steps tenants can take to put themselves in the strongest possible position during the negotations. 

• Highlight property limitations - During open-market reviews, tenants should note the property’s disadvantages, such as outdated facilities, high energy costs, limited access or unaddressed repairs. You should also take photographs and compile other evidence, such inspection reports or maintenance records, to use in your lease negotiations.

• Assess affordability and business impact - Any change in rent can have a significant impact on your business, so it’s important to understand what level of increase you could realistically accommodate. Before negotiations begin, review your finances and establish your limits so you can approach discussions with a clear strategy. If a higher rent cannot be avoided, you may be able to negotiate measures that ease the impact, such as a phased increase. You should also review your lease to see whether you can exercise a break clause, sublet or assign the lease or even negotiate a lease surrender. 

• Understand your options if you disagree with a proposed increase - If you cannot reach an agreement during rent review negotiations, most commercial leases include a formal dispute resolution mechanism. This usually involves an independent expert or arbitrator who will assess the evidence from both parties and determine the appropriate rent in line with the lease terms.

• This process tends to favour those who are well prepared and can present strong market evidence. Preparing your case early and seeking advice from a chartered surveyor can help to protect your position. 

Commercial rent review tips for landlords

Landlords should also take a strategic approach to rent reviews to ensure the proposed rent reflects market conditions while maintaining a productive relationship with their tenants.

• Gather strong comparable evidence - If you want to increase the rent through an open-market rent review, you will need strong and up-to-date evidence of similar properties achieving higher rental values. That should be based not just on advertised rents, but on recently agreed lettings from comparable properties.

• Maintain a constructive relationship - Most landlords want to maximise rental income, but there’s also value in maintaining a good relationship with your tenants. Reliable tenants provide consistent income and reduce the risk of vacancy, so approaching negotiations professionally, openly and with a willingness to compromise can help reach an agreement without damaging that relationship.

• Consider ways to sweeten the deal - A tenant may push back against a proposed increase, even if the new amount reflects the current market. Rather than risking a dispute or ruining your relationship with a reliable tenant, consider whether there are incentives you can offer to make the revised rent more acceptable. 

Examples include:

• Offering a short rent-free period

• Contributing towards tenant fit-outs or improvements

• Allowing more flexible payment terms

• Introducing a break clause

• Extending the lease term at an agreed rate

• Offering options for renewal

• Providing upgrades that improve the property’s functionality

Expert guidance for commercial rent reviews and lease negotiations

At Eddisons, we provide specialist lease advisory services, including support with commercial rent reviews, to help tenants and landlords achieve the best possible outcome in their lease negotiations.

With 35 offices nationwide, our experienced surveyors combine local market knowledge with practical negotiation expertise. Get in touch in touch today for a free consultation with one of our surveyors.