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In the Notting Hill commercial property marketplace, rent review is a normal procedure. Landlords and tenants periodically re-evaluate the terms of their rental agreements for commercial properties. They do this at set intervals—every three to five years—or as a response to specific events. These events include the expiration of a tenant’s lease or a tenant’s request for a reduction in rent.
When does your rent change? The property market’s current state is a key factor in determining the outcome of a commercial rent review. In a vibrant market, landlords can command quite a bit more for their properties. In a slow market, tenants can use the downturn as leverage to argue for lower rents or some other form of relief. Location, property condition, and the strength of the tenant’s business, meanwhile, can add some other dimensions to the negotiations.
Rent reviews serve to determine how the property’s market condition corresponds with its current lease.
A rent review usually occurs after a set time—often 3 years, though it could be slightly longer or shorter—to generate a fresh comparison to use against either the current lease or other properties in the local market. For the landlord, it either enacts or steers clear of severe consequences in relation to the underlying mortgage that the landlord holds on the property. For the property manager, it keeps the property from losing considerable value.
In Notting Hill, the norm for commercial rent reviews is to employ the services of an independent professional. This independent professional is a Chartered Surveyor who operates in such a way. When a commercial rent review takes place, the property in question and the local market are assessed to come up with a rent that is deemed fair. Both the landlord and the tenant can choose their own Chartered Surveyor to act for them. Once these two surveyors have done their jobs, they negotiate a rent between themselves.
Both landlords and tenants must engage in proper preparation for a commercial rent review. Landlords must thoroughly understand the market and have a comprehensive knowledge of the property, its condition and value, and the tenant’s requirements. This understanding allows landlords to negotiate a renewal lease effectively. Furthermore, landlords should possess the necessary financial information to helps paint a picture of the tenant’s fiscal health and, thus, the justifiability of the new rent amount.
The prospective tenant must come to the negotiation well-equipped with pertinent financial information and other relevant data about their business. They should also have a good command of their rights and obligations under the lease and be ready to negotiate in good faith.
Carrying out commercial rent reviews in Notting Hill can be a complicated and drawn-out process. However, with proper preparation and good representation, both landlords and tenants can arrive at a fair and beneficial outcome.
When you analyse the rental review notice, you need to determine the highest rental value that your business can withstand and pay. If you are up against a rent review, you need to figure out the area average price per square foot. Then you should research the local average £/sqf for similar property types, including all the comparable real estate within your property’s relevant market. While pursuing this resist-research, keep in mind: the square footage rent must be tolerable and affordable for the business in this location.
If you receive the review and are not satisfied with it, or if you want to discuss the new figure within the process of lease renewal for the rent review, you have every right to do so. Use the market that is happening around you as a reference. You should be able to reach some sort of agreement within the middle ground that both you and the landlord can live with. In this scenario, if things are contentious, you may want to seek a professional to help both sides save time and reach a minimal dispute outcome.
The primary advantage of having a rent review surveyor is the skill with which he or she navigates the often tedious rent review process.
The day of the actual review should go pretty smoothly, given that there should be a representative for both sides—landlord and tenant—present to work things out. You can feel confident that your side will not be the one doing the stalling on the day of the review.
Before asking for a rent review, you or your landlord must ascertain that adequate notice was given. Negotiation is a huge part of the tenant’s rent review process, and it is at this stage that a Chartered Surveyor will assert how vital the notice period is with 3 months being the benchmark in the industry.
The property owner will either use the Retail Prices Index to calculate the figure and the rate of commercial rent that is ordinarily accepted across the UK or will examine other local rent reviews and lease advisory reports to arrive at an average figure.
The Full Building Survey report includes the following:
When it comes to the detail that the surveyor will go into concerning defects, repairs, and maintenance, the Homebuyer Survey is fairly standard. Full Building Surveys, however, are more refined and go into more detail about possible and likely defects. Repairs and maintenance are covered in more detail. The Survey cost depends on the age, size, and value of the property.
The analysis they undertake is a visual inspection. This means that, for the most part, the building components that can be seen will be looked at and assessed in accordance with the surveyor’s remit. The Home Survey Report will show you the visible defects and then go on to discuss the kinds of partially hidden or totally hidden defects that the surveyor thinks you should be aware of. It will also try to clarify what kinds of repair work need to be done and the nature of the repairs. The survey is effectively a way to consider “defects” and their potential impact on the building.
A Building Survey Report contains the most important information for understanding the condition of a property. The surveyors that undertake the work follow a set procedure. The first part of the report contains a general overview of the property and its surroundings. The second part details the major and minor problems with the property’s components, inside and out. These problems range from serious structural defects to issues with doors or windows that don’t close properly, and everything in between. The report is written in clear English, complemented by diagrams and photographs. If any of the problems found are what a surveyor might consider important, that’s what the report indicates—using clear and unambiguous language.
Surveyors usually use a tick box to indicate methods of repair when drafting a building survey report. They are also required to comment on the timescale of any repairs. A condition rating is typically included: what needs to be addressed immediately, what is in the process of deteriorating but is in reasonable condition, and what has not deteriorated at all.
A building surveyor is responsible for a variety of checks and tests during a building inspection. These could be checks or tests for damp and woodworm, or they could be visual inspections of the building’s structure. In building surveying, there are visual inspections of roofs – checking for tiles and slates (if applicable) and also checking for leadwork (if applicable) and looking at the junctions between roof and wall. If the wall structure has brick in it, the surveyor will visually check for any “spalling” (brick breaking apart visibly) and any bulging (brick failing to hold its place visibly), for example.
If defects need fixing immediately, then the options recommended for this survey specify what to repair and give some idea of how long the problem has existed. For the most part, this survey describes recommended repair approaches that are standard in the industry and that do not require excessive expenditure. Future maintenance is also discussed, including what to expect when the problem being surveyed is not repaired and what to expect with repairs that are made but with questionable methodology.
Your surveyor will explain some of the legal aspects of purchasing the building, covering—in as much or as little detail as you desire, and their implications, but this is subject to your solicitor verifying.
You might consider having a separate market valuation done to determine whether the property’s asking price is warranted. You’ll also need a reinstatement cost valuation for insurance reasons.
RICS’s industry guidelines suggest building surveys for properties that are large, very old, in some disrepair, or have unusual features. Building surveys are also recommended if you plan to do any significant renovations or extensions.
If you’re purchasing a relatively modern home that’s in decent shape and built to ordinary standards, then a Home Buyer Survey is an acceptable choice. If you want the assurance of an inspection and report that are pretty much guaranteed to turn up any issues that might be hidden or just hard to see, then you should go for a Full Building Survey instead.
The Full Building Survey is more detailed; it is more specifically tailored to the property your surveyor would be inspecting. It also comes with more advice on the visible defects found and on the potential hidden defects that they suspect may be present. Your surveyor will illustrate reports with photographs so that you can clearly see what has been discovered. Both the Home Buyer and Full Building Surveys describe the repairs needed, the order in which the repairs should be done, and the kind of “maintenance measures” that will be required to keep the property in good condition.
A HomeBuyer Report does include a market valuation as well as reinstatement costs. However, a Full Building Survey does not. The main reason for the differences in what is and isn’t included in the two types of reports is how focused the reports are on the condition of the property. The Full Building Survey is the most in-depth and comprehensive survey of a property that you can have done.
All the professionals on our panel, whether Building Surveyors or Structural Engineers, are members of the Royal Institution of Chartered Surveyors (RICS) or hold equivalent accreditation from an industry-standard body (e.g. RPSA or CIOB). This ensures that you can be completely confident in the thoroughness and comprehensiveness of your Building Survey Report or Valuation. Your surveyor will be independent and will provide you with expert advice based on their judgment and without any bias.
Looking for a Chartered Surveyor? If you are buying a property, contact us for a building survey. Our panel of CIOB, RPSA and RICS surveyors will help you with the Level 2 or Level 3 property survey you need in Notting Hill. We can also assist you in Red Book Valuations, Party Wall Awards and other services. Reach out to us today for building surveyors, valuers and party wall surveyors in London!
