UK Landlord Forum / Life

A friend has a property and the tenant is refusing to accept a rent increase when it is a condition in the lease.

this is a take away and a flat above, what can be done about this situation.

there is a clause to review the rent every 4 years in the lease.

It all depends on the lease.

This is a commercial agreement.

If its covered by the L&T act 1954 then you can issue a section 25 notice giving 6 months to agree a rent increase, or either party can apply to court.

It is a minefield.

I have just been through it.

I wouldn't want to again.

I would try and be realistic on negotiations, and try and avoid court, but sometimes that is what is needed.

DO NOT BE AN ARSE AN ISSUE NOTICE.... If it is a 1954 act then you will get stung big time promice.

( my caps are for my benefit I almost did!)

It is a standard lease which is dated 1998 (16 years) and a deed of variation was done to extend it  20 years (2009) with another tenant who is in the property now.
There is a clause for rent reviews every 4 years but this has not been kept up, if fact the rent has only gone up £1670 since 1998.
Also the tenant will not talk to the landlord or anyone else for that matter, last week he took ill just when we contacted them by Skype.
I know he was there as his wife and son kept looking to there left.
We need to increase the rent as the landlord can not live on the rent there getting now, they could go bankrupt in a couple of years if the bank dose not ask for repayment of the loan outstanding against the property

Sounds very familiar.

My tenant had not has a rise since 1996.

Any commercial lease over 6 months in term, unless it is specifically excluded, is governed by the LTA 1954.

Google it.

Then if it is as critical as you say you have 3 choices.

1. Do the research yourself, and try and get agreement. This is going to be hard, and will take at least 6 months from issuing the notice S25 notice to get a rent increase.
2. Instruct a surveyor who will argue "comparable" rent for other premises of a similar type
3. Instruct a solicitor to send the correct forms etc.

I downloaded a proforma notice for about £12 I think.

Even if the agreement ends in 18 months time, if the agreement is LTA 54, then until you apply to the court for the agreement to end, they can keep paying the same rent.

The other thing I did was to go through the lease with a fine tooth comb and make sure any other obligations the tenant had are met ( in mine this was a contribution to repairs, to insurance, and to water charges) I used these to get some money, but also if they are not meeting these obligations then its a bit easier to get them out.

Yes their are obligations for repairs to the property and LTA 1954 is mentioned in the lease also the Law of property 1925 in mentioned in the lease.

Here is part of the deed of variation below
1.(1)(d) For the next FOUR YEARS" of the said term (hereinafter called "the fourth period") either the yearly rent payable hereunder immediately prior to the commencement of the fourth period or the open market rent of the demised premises at the commencement of the fourth period whichever is higher.

1.(1)(e) "For the next FOUR YEARS" of the said term (hereinafter called "the fifth period") either the yearly rent payable hereunder immediately prior to the commencement of the fifth period or the open market rent of the demised premises at the commencement of the fifth period whichever is higher.

He is only paying 16750 for both the Restaurant and the flat above around 1850 Sq ft of area 1100 been the ground floor.

As I said, it's up to you to negotiate.
You need to provide evidence to them that the rent is less than market value and what you could expect to get.
All the other things about notice I have put remain true.
He does not have to pay a penny more though until you take it to court.
You have to issue a "friendly notice" detailing what you propose in the rental term, then wait six months, then apply to the court, wait for a date ( they are buzy) then go to court with all your evidence backing up your case for higher rent, etc etc.

You need to watch yourself, and your conduct, as anything less than professional behavior will not be looked at well.

People get confused, thinking that residential and commercial leases must be near enough the same... They are not... Big time.

If your friend is serious, then they should get legal advice immediately.

Personally I found out that the tenant is massively favored in negotiations, as the landlord has to issue legal proceedings. But when I did do this, they simply handed in their notice. They knew they were paying under market rent, but were hoping to string it along for another two years then retire. They also knew that the market rent would be more than they could afford.

Thank you for your time.

I think I will advise the landlord to put the property in the hands of a letting agents that can deal with this one.

One big problem is that we are in CYPRUS and the property is in London!

Any pointers of who to look at would help, I am new to this site and do not know if there is a private message system on it.

Paul

I have no experience of London.

I would NOT put it with a letting agent.

You need to find an experienced commercial surveyor, expect to pay £2k plus half of what ever increase they get.