New landlord - rent increase pending

[Maverick007]

We have been in our current office space for 4 years and the landlord has had an offer to sell the units (5 in total of which we rent one from him)


The new landlord if he does indeed buy the units has already told us he intends to put our rent up by £400 per month as he thinks we are paying too little.


The current landlord says that if we sign a new 3 year rental agreement with him now, and then he does sell, the new landlord wouldn't then be able to put our rent up for 3 years.


Does this sound true, or could the new landlord charge basically what he wants, and if we don't like it - it's tough luck.

[kiethton]

Totally dependent on the terms of your lease re. rent reviews and whether a surveyor would agree that the unit is currently under-rented.

Signing a new lease now - be careful, the current landlord may want this as a longer WAULT will, in general, increase commercial property value.

Depending on what % the proposed rent increase represents it may well be fair, look at the ERV growth numbers via IPD etc and they've moved on a fair bit for industrial units, especially in the SE so if your still paying the rate agreed a few years back you may well be paying considerably less than current ERV.

[Maverick007]

thanks for that info, very useful.


so if we did sign a new 3 years contract now at the current rate and it doesn't say anything about rate increases etc, then the potential new landlord could still get a surveyor in and get the rent increased?

[kiethton]

Maverick007 said:

thanks for that info, very useful.


so if we did sign a new 3 years contract now at the current rate and it doesn't say anything about rate increases etc, then the potential new landlord could still get a surveyor in and get the rent increased?

Depends entirely on the terms of your lease agreement and what you agree and document re. further reviews.

I'd be inclined to speak to a good surveyor/commercial lease tenant representative to help guide you though the process. Will often pick up things that save you more than their modest fee.

[Ean218]

Presumably you have only heard this from the current owner and he is simply doing you a favour by letting you know....

Far more likely that if he can screw more rent out of you now then he can achieve a higher sales price.

[soxboy]

Does sound a little fishy from the current landlord.

Basically, he will want you to sign a new lease because it will be worth more with a new lease in place at a lower rent than a short lease at a potentially higher rent.

As others have said, do a bit of homework to find out if an increase is justified and to what level. Once a new lease is in place the rent can only be increased according to the rent review provisions within it, not when the new landlord feels like it.

[PurpleMoonlight]

What is in your current lease?

How long for and from when?

Is it inside or outside security of tenure LTA 1954?

Is there a rent review clause?

[Maverick007]

i would normally agree that it sounds a little fishy but the current landlord isn't that bothered about selling unless the price is right and we don't want the new landlord to take over as he is a t**t of the highest order.


I will check current agreement etc.

thanks for the advice guys

[CS Garth]

If this is all coming through the current landlord I'd suggest the rent increase threat is bs to get you to extend the lease so that the new landlord buys something with longer sitting tenents.

Take everything with a lorry load of salt and assume that everything whoever is telling you is motivated only by self interest

[Chrisgr31]

You also need to liaise with the tenants of the other 4 units. Otherwise if one agrees to an increase you'll all end up having to agree to an increase.

You should all be able to appoint the same surveyor to act for you all as well and therefore agree better (cheaper) terms.

In general your lease will state when the rent reviews are and the landlord can usually only increase the rent from dates mentioned in the lease. Usually the lease states how the rent should be calculated, and in many cases the figure originally quoted by the landlord can be negotiated. If not agreed most leases state the reviewed rent is determined by an independent third party.

If the lease is due to expire then if you are protected by the landlord and tenant act there is a negotiation process and if no agreement then the terms are determined buy the court. If you are not prepared by the Act then the Landlord can quote whatever terms he likes and if you dont like it you have to vacate.

So read your lease and speak to the other tenants then get advice from a surveyor!