Are Signs of Improved Rental Growth Starting to Emerge?

Posted on 29 April, 2016 by Chris Grigorovsky

A combination of improved letting activity and taking surplus stock out to market has started to show signs of rental growth in some locations and sectors, according to commercial property agent, Prop-Search.

Rental

One of the main factors to these findings is savvy landlords being on the back of increasing economic confidence, contemplating invoking rent reviews due under leases, rather than merely being grateful for an existing rental income stream.

Director of Prop-Search, Ian Harman MRICS, commented: “Some landlords are also contemplating their position in respect of rent reviews which may have passed, but where the lease does not contain any clear provisions that time is of the essence, preventing matters from being re-visited retrospectively – although the valuation itself will invariably be fixed.

“To a great many tenants the ability to invoke a rent review which may be two or three years past, comes both as a nasty surprise and frequently gives rise to an unplanned financial liability.”

For a landlord, care needs to be taken in order to ensure lease terms for valuation purposes are consistent and the lease doesn’t have any restrictions.

For tenants, it could be that securing professional advice is going to be a worthwhile investment, relative to the possible cash flow implications of having to fund a retrospective and unexpected rental increase.

Mr Harman concludes: “Whilst locations and sectors are not performing in exactly the same way and properties need to be considered on a case by case basis, recent experience suggests that both landlords and tenants may both be missing out by not taking appropriate advice when rent reviews start falling.”




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