Rents on flat leases are comparatively cheaper, when compared to other premises. This is because the tenant has already paid a huge sum as ‘premium’ in advance and cannot be realistically expected to pay a high rent, as well. Usually, the average rent for a flat comes to around £ 200/year.
The terms of the lease should clearly explain everything in detail about the rent- when shall it be payable, whether it is to be paid in advance or in arrears, is to be paid half-yearly or as a lump sum…etc.
A rent usually loses its value over time because of inflation. Therefore, it is common for leases especially the long term ones to include a clause for periodic increase in rent. A conveyancing solicitor acting for the landlord should consult his client before including this provision and then mention about the proportion of increase in the lease.
The landlord would want to increase the rent to compensate for the decrease in value, but shall do so after understanding the market conditions prevalent at the time. Tenants will obviously not agree to an unregulated increase in rent. As said earlier, the tenant has already paid a huge amount as rent and would be looking to recover this money on a further assignment, which would not be possible if the increase in rent is uncontrolled or is substantial.
To avoid tensions while negotiating, it is common for both parties to the contract to agree upon the increase and finalise the terms beforehand. For instance, if the rent for the first 20 years of the term is £200, then for the next 20 years it would increase to £300 or more. A conveyancing solicitor acting for the tenant should go through these carefully and explain the details to his client.
Commercial leases should clearly mention the due dates of rent payment and if they are payable in advance or arrears. Usually, these are paid in advance, but should be checked to ensure compliance. In a commercial lease, the rent is a major consideration for both, landlord and tenant. However, provisions related to the increase in rent due to inflation are subject to legal considerations and hence should be discussed by the solicitors of both parties.
Photo courtesy: David Berry