How is interim rent calculated?
  • How is interim rent calculated?
  • Exceptions
  • Other scenarios
  • Terms of lease agreed?

The aim of the procedural changes that took effect on 1 June 2004 was for interim rent to be the same as passing rent to discourage landlords from opposing renewal for no reason.LTA 1954, s 24CSI 2003/3096

Section 24C(2) of the Landlord and Tenant Act 1954 (LTA 1954) provides that the rent payable under and at the commencement of the new tenancy shall also be the interim rent. There is no longer a cushioning effect ie a discount to the open market rent that applies to interim rent.

For this to apply:

  1. the tenant must, at the time of the notice being served, have occupied the premises for business purposes

  2. the landlord must not be opposing the renewal

  3. the new tenancy must relate to the whole premises comprised in the current lease

Exceptions

Substantial change in rental market

If there has been a substantial change in the rental market between the dates that the interim rent becomes payable and the commencement date of the new tenancy, the usual rule in LTA 1954, s 24C(2) does not apply. The court uses its discretion to determine an interim rent payable in the open market. The court must have regard to:LTA 1954, ss 24C(3)(a), 24C(5)

  1. the rent payable under the current tenancy, and

  2. the rent payable under any sub tenancy

The rent will be calculated by reference to LTA 1954, s 34 but the valuation date will move to the interim rent’s commencement date.

See Practice Note: Interim rent

Substantial difference in terms

Irrespective of whether the market has moved, if the terms differ from those of the old tenancy the interim rent will be whatever