Rent review—the hypothetical demise
Rent review—the hypothetical demise

The following Property practice note provides comprehensive and up to date legal information covering:

  • Rent review—the hypothetical demise
  • The hypothetical demise
  • Why depart from the presumption?
  • Lack of comparables
  • 'Without prejudice and subject to contract'
  • Maximise the landlord’s return
  • Tenant to carry out building work

Rent review—the hypothetical demise

The hypothetical demise

The starting point in construing a rent review in a commercial lease is an assumption that the rental value is to be that of the whole of the demised premises as they exist at the review date. This is the presumption of reality. The assumption may be displaced by clear and unambiguous wording in the lease itself, which in the factual and business context gives a sufficiently clear indication of a contrary intention. The court may not have regard to subjective evidence of intention at the relevant time or of the course of negotiation between the parties. In Coors, it was held that it was sufficiently clear in the lease that for rent review purposes only that part of the demised premises which consisted of the site, excluding buildings, should be valued.

A rent review assumption that premises are available for letting for a specified purpose or are fit for use for a specified purpose, does not justify valuing a building notionally adapted for that purpose. This is in contrast to an assumption that the property is actually in use for a particular purpose. In that instance, it is also assumed that any works necessary for that use to be lawfully carried out have been done.

In the absence of an express provision, the court may imply a departure from the

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