Q&As

A lease of a parking space contains a rent review on an open market basis. The lease contains a clause restricting assignments only to the owner of a particular flat in the same building (held under a separate lease).The rent review clause provides that the new rent should be that which might reasonably be demanded by a willing landlord on a lease on the same terms and conditions as the existing lease other than as to the amount of rent and length of term. There is no mention of the hypothetical tenant. Should the rent then be assessed on the basis that any person may be a tenant, but they would then only be able to assign to the owner of a particular flat, or should it be reviewed assuming that only the owner of that particular flat could be the tenant?

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Produced in partnership with Georgia Whiting of 4 King’s Bench Walk
Published on LexisPSL on 26/11/2015

The following Property Q&A produced in partnership with Georgia Whiting of 4 King’s Bench Walk provides comprehensive and up to date legal information covering:

  • A lease of a parking space contains a rent review on an open market basis. The lease contains a clause restricting assignments only to the owner of a particular flat in the same building (held under a separate lease).The rent review clause provides that the new rent should be that which might reasonably be demanded by a willing landlord on a lease on the same terms and conditions as the existing lease other than as to the amount of rent and length of term. There is no mention of the hypothetical tenant. Should the rent then be assessed on the basis that any person may be a tenant, but they would then only be able to assign to the owner of a particular flat, or should it be reviewed assuming that only the owner of that particular flat could be the tenant?

In the vast majority of cases in respect of rent on an ‘open market basis’, the value of the same will be arrived at through the consideration of comparable transactions. This scenario deals with a case in which there is only one potential lessee of the parking space, and this potentially causes difficulties when considering what is an ‘open market basis’ when that market is far from open.

Where a rent review is based on the concept of an open market letting, the rent will be assessed on the basis that both parties are ’willing’ despite in this instance, the lease only containing reference to a ‘willing landlord’ and not a ‘willing lessee’. In Dennis & Robinson v Kiossos Establishment [1987] 1 EGLR 133, Fox LJ said that one had to assume that:

The landlord is willing to let the premises. Equally, the supposed tenant is willing to take the premises. The notion of letting in the open market between an unwilling lessor and an unwilling lessee (or between a willing lessor and an unwilling lessee) for the purposes of determining a reasonable rent makes no sense.

The courts have emphasised the hypothetical na

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