This Practice Note sets out the law on rent and rent review provisions in commercial leases in Scotland. For contentious aspects of rent and rent review see Practice Notes: Rent arrears in commercial leases—recovering—Scotland and Rent review disputes in commercial leases—Scotland. Rent One of the essential common law requirements for a contract of lease to exist is the payment of rent even if this is only a nominal amount. Rent is usually payable quarterly in advance on the Scottish quarter days but it is not uncommon for some leases where the landlord is an English property company or pension fund, to provide for rent to be paid on the English quarter days (see below) in order to create consistency across the landlord's property portfolio. Following the recession in 2008, it has become more common for retail tenants to ask their landlords for rent to be paid monthly in advance and many landlords are prepared to agree to this. Such agreements are usually personal to the original tenant and

Rent Rent is the sum due by a tenant to the landlord for use or occupancy of a property. The amount of rent must be ascertainable from the lease. This does not mean it must be stated for the whole term of a lease, but an initial rent must be identified, along with a mechanism (usually a rent review clause) to enable future rents to be ascertained. Rent is usually stated to be exclusive of VAT, payable without deduction and without demand. See Practice Note: Rent and rent review in commercial leases in Scotland. Commercial rents are usually paid in advance by equal instalments on the quarter days (28 February, May, August, and November), although English parties sometimes prefer to choose English quarter days (25 December, 25 March, 24 June and 29 September). Payment of rent monthly is also becoming increasingly popular. Where rent is payable quarterly in advance, the whole instalment is payable on the quarter day. This point can be important where a tenant seeks to operate

ARCHIVED: This Practice Note has been archived and is not maintained. The Commercial Rent (Coronavirus) Act 2022 (CR(C)A 2022) continues and extends the protections given to commercial tenants during the coronavirus (COVID-19) pandemic. It does this by ringfencing rent and service charge debts accrued during the period when premises were required to close, and establishing a statutory arbitration process under which the debts may be reduced or payment deferred. It also imposes a moratorium on landlord remedies in order to protect tenants while the arbitration process takes place. The key provisions of CR(C)A 2022 and the government’s accompanying Commercial rent code of practice following the COVID-19 pandemic (the Code), are set out below. The government has also issued statutory guidance on the terms of the Act. The deadline for starting an arbitration has now ended, and with it the moratorium on landlord remedies in cases where no reference has been made. The moratorium remains in place for arrears that were referred to arbitration in time (see Moratorium

[To be printed on Landlord’s letterheaded paper] Our Ref: Date: To: [insert name of Tenant] From: [insert name of previous Landlord] [of [insert address] OR incorporated in England and Wales with company registration number [insert company registration number] whose registered office is at [insert registered office address]] (Previous Landlord, we, us) To: [insert full name of Tenant] [of [insert

Rent control describes legal mechanisms that limit the amount of rent a landlord may charge or the rate at which rent can be increased during a residential (or occasionally commercial) tenancy. It is a descriptive term rather than a single defined concept and may encompass rent caps, index‑linked increases, rent review regulation and enhanced security of tenure.In England and Wales, there is no general rent control for new private sector tenancies, but historic regimes under the Rent Acts 1915–1977 and current provisions on “fair rents” for regulated tenancies still apply to a shrinking category of lettings. Assured and assured shorthold tenancies are subject instead to market‑based rents with limited statutory controls and tribunal review mechanisms.In Scotland, Ireland and Northern Ireland, modern rent control is more developed, commonly via Rent Pressure Zones or similar schemes, rent increase restrictions and tenancy tribunals or boards empowered to determine lawful rent levels.Practitioners encounter rent control issues in advising on historic tenancies, challenges to rent increases, compatibility with Article 1 Protocol 1 ECHR, investment valuation, housing policy and legislative reform affecting private rented sector regulation.

Date [date] Parties 1 [name of Landlord] [of OR incorporated in England and Wales (company registration number [number]) whose registered office is at] [address] (Landlord) 2 [name of Tenant] [of OR incorporated in England and Wales (company registration number [number]) whose registered office is at] [address] (Tenant) 3 [[name of Guarantor] [of OR incorporated in England and Wales (company registration number [number]) whose registered office is at] [address] (Guarantor)] 1 Definitions 1.1 This Deed is both supplemental and collateral to the Lease. 1.2 Terms defined in the Lease have the same meaning in this Deed. The following additional definitions apply: Bank • [name] or any other UK clearing bank that the Landlord (acting reasonably) notifies to the Tenant; Default • includes: (a) failure by the Tenant to pay the Rents or to comply with its other obligations in: i the Lease; or ii this Deed; (b) forfeiture or disclaimer of the Lease; Deficit • arises whenever the Deposit Balance is less than the Minimum Balance; Deposit • the Initial Deposit and any other money held from time to time in the Deposit Account on the terms of this Deed; Deposit Account • [Account No. [details] OR a separate [interest-earning] deposit account] at the Bank; Deposit Balance • the amount standing to the credit of the Deposit Account from

General A rent deposit is a sum of money deposited by a tenant when it takes a lease—it is deposited as security against non-payment of rent and other breaches of the lease. They are often given where a lease is either assigned or granted and the incoming tenant cannot supply the landlord with evidence of sufficient financial worth. They may be offered in place of or in addition to a guarantee to improve the tenant's covenant strength. It is a common feature of commercial leases that a rent deposit is paid to be held either by the landlord or by a third party as stakeholder. For further information on commercial rent deposits generally, see Practice Note: Rent Deposit Deeds—Commercial Leases. This Practice Note considers the landlord’s ability to deal with rent deposits if a corporate tenant goes into an insolvency process (primarily we deal with administration). The position of the landlord depends largely on how the deposits are held and structured. Need for a rent deposit deed If a rent deposit is paid, it is usual and prudent for the

What is a rent guarantee? A rent guarantee is an incentive offered by the seller of an investment property which has empty premises (eg an empty floor in an office block or a unit in a shopping centre). This may be because the property is newly built and the seller (as developer) has not secured tenants for all the units by the completion date or because a unit in an established property falls vacant between exchange and completion. A rent guarantee may also be used where a tenant is not paying full rent or has gone into insolvency. It guarantees payment of a rental income to the buyer in respect of the empty premises. A seller might offer a rent guarantee if the premises are likely to be let soon after completion (eg there is a prospective tenant or the premises are sought after). This avoids it having to concede a price reduction. The purpose of a rent guarantee is to place the buyer in the same position as it would have been had the premises been let on completion. In

This Practice Note looks at the right under the Housing and Planning Act 2016 (HPA 2016) for tenants and local housing authorities to seek an order requiring landlords of a residential property in England to repay rent or benefits, if they have committed certain offences. It covers the circumstances in which an application may be made, the procedure to be followed and the amount of rent that may be recovered. Eligibility A tenant or local housing authority (LHA) may apply to the First-tier Tribunal (Property Chamber) (FTT) for a rent repayment order (RRO), requiring a landlord who has committed a housing-related offence listed in HPA 2016, s 40(3) to: • repay an amount of rent paid by a tenant, or • pay to an LHA housing benefit or universal credit which had been paid in respect of rent The offences set out in HPA 2016, s 40(3) include: • violent entry under the Criminal Law Act 1977 • unlawful eviction or harassment of occupiers under the Protection from Eviction Act 1977 • failure to comply with improvement notices

Local Government analysis: This was an appeal to the Upper Tribunal (Lands Chamber) by Global 100 (G100) against a decision of the First- Tier Tribunal (FTT) granting the respondent property guardian’s application for rent repayment orders (RROs) under section 43 of the Housing and Planning Act 2016 (HPA 2016). The London Borough of Haringey entered into an agreement with the company GGM in respect of a property it owned for live-in property guardianship services. GGM then granted permission for Global 100 (G100), a related company, to grant licences for live-in guardians, including the respondents to the appeal. The Local Authority did not receive any payment from the respondents but only a monthly consideration from GGM. The respondents applied to the FTT for RROs asserting G100 had committed an offence under section 72(1) of the Housing Act 2004 (HA 2004) by being in control or managing an HMO which ought to have been licensed. G100 tried to argue that Haringey was the ‘person managing’ under HA 2004, s 263(3)(b). The FTT accepted the agreement between Haringey and GGM was a licence and not a lease and that G100 was not the owner or the property and that but for this agreement Haringey would have received payments from the respondents. However, FTT held that the arrangement was not one ‘by virtue of which’ GGM received the payments and as it was G100, the FTT determined that the Haringey was not the ‘person managing’. The Upper Tribunal dismissed Global 100’s appeal and held that the FTT had not erred in law in concluding that Haringey was not the ‘person managing’ a property for the purposes of HA 2004, s 263(3)(b) and HA 2004, Sch 14, para 2. Haringey had entered into an agreement with GGM which permitted it to use the property for live-in guardianship services in exchange for monthly consideration. GGM then permitted a connected Global 100 to grant licences to property guardians in exchange for a fee. The Upper Tribunal held the FTT has not erred as there was no evidential basis for concluding that Haringey received any moneys from the occupiers ‘by virtue of’ the arrangement. Written by Tim Baldwin, barrister, Garden Court Chambers.

Property Disputes analysis: The Court of Appeal held that the Upper Tribunal (Lands Chamber) (UT) had been justified in concluding that the appellant had been an undisclosed principal under an occupation agreement and had therefore been the respondent’s landlord for the purposes of the Housing and Planning Act 2016 (HPA 2016) such that a rent repayment order (RRO) could be made.

This Practice Note provides an overview of rent review clauses in commercial leases and their operation. It also provides an outline of the procedures used for settling rent review disputes by way of arbitration or expert determination. It does not cover agricultural rent reviews for which, see Practice Notes: Rent review under 1991 Act agricultural tenancies in Scotland and Rent review under 2003 Act agricultural tenancies in Scotland. Need for rent review Rent reviews allow the adjustment of commercial rents to the market level at the date of review. They are most commonly seen in commercial leases of a longer duration. Rent reviews take place at the intervals agreed in the rent review clause in the lease. Typically, this is at periods of three to five years although this can vary. In addition to specifying the review dates, the lease should specify the method which is to be used to undertake the review. There are several possible methods, which are discussed below, however the most common