What happens if you missed a market rent review?
iIn most commercial leases, the landlord is entitled to increase the rent on the market rent review date. However, what happens if the landlord misses the market rent review date?
Assuming you are the landlord and you are using the ADLS standard form commercial lease, then missing the rent review date is not a big problem.
If the landlord’s notice to the tenant to increase the rent is no later than 3 months after the rent review date, then the landlord can still back date the rent increase to the start of the rent review date.
After receiving the notice to increase rent, the tenant has 20 working days to object to the increase. If the tenant does not dispute the change, then the rent is set at the new rate from the market rent review date.
However, if the landlord’s notice to the tenant is more than 3 months after the rent review date, then the landlord can’t back date the rent increase to the start of the rent review date. The landlord is still entitled to increase the rent, but any increase in the rent can only start on the date the notice was given.
Therefore, it is in the landlord’s best interest to give written notice to the tenant as early as possible prior to the rent review date. The landlord can give notice up to 3 months prior to the rent review date, so being on top of rent review dates can maximise the landlord’s profit.
At Capstone Law, we use lease management software to help our clients keep track of rent review dates and lease renewal dates, so you will never miss these critical dates on your lease. Leave the administrative work to us so you can focus on other more important things.
Partner & CEO
Kenneth is the founding partner of Capstone Law. Kenneth has a MPhil from the University of Cambridge, and he was also awarded the prestigious Dean’s Academic Achievement Award for graduating from the University of Auckland law school in the top 5% of his class. Kenneth has worked at some of the best law firms in the country before starting Capstone Law.
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