Tenancy Agreement Rent Review Clause

When the term of the lease has expired and no new contracts have been signed, the lease automatically becomes a periodic lease. If the tenancy agreement does not provide information or procedures regarding a rent increase, the landlord can only increase the rent by agreeing with the tenant or by listening to a communication according to point 13. A rental price review clause applies to periodic fixed-term or contractual leases. If such a clause is contained in a temporary or contractual tenancy agreement, the section 13 procedure for rent increases is excluded. [1] If the tenant has a periodic lease (a lease agreement that runs from month to month or less from week to week), the landlord cannot increase the rent more than once a year, unless the tenant accepts it. Sanctions should not be excessive and should not be wrongly imposed. A penalty clause should compensate a landlord for the costs incurred and not punish the tenant. It would be wise to draw the tenant`s attention to any penalty clause before the lease is signed. As a general rule, this would be done in a cover letter. Leases longer than five years generally include a rental price review provision (unless the parties have agreed to a turnover rent or a gradual increase in rent). A rent review is essential for the lessor in order to preserve the value of his investment, so that he can benefit from possible increases in the rental value during the duration of the lease. Without them, backers would have difficulty selling or financing real estate. Finally, some parties favour a revision of rents on the basis of the tenant`s turnover.

This is particularly advantageous for tenants who start a new business, since the rent is calculated according to turnover. However, turnover does not always mean profit. In addition, if your business is successful, you are required to pay higher rents. This type of clause is quite widespread in the retail trade and divides the burden between the landlord and the tenant. However, there may be practical problems with revenue documentation and account setting for the owner. The inventory must be signed and dated by both the landlord and the tenant and a copy attached to the rental agreement. If the proposed rent increase is excessive or unfair, you can ask the court to challenge it and get a fair rent setting. You cannot go to court until you have received a section 13 notice. More information can be found below. Most leases would include clauses preventing the lease from being transferred to others, or the tenant subletting some or all of the property to another person. If the tenant reduces control over who resides in the property, what are the rights of the tenants and how they can be withdrawn.

On the other hand, tenants must ensure that a tenancy agreement certainly requires that time is not “essential”, as it is the original notice of the landlord`s rent review, that it can be considered “essential” with respect to the notification time of the tenant`s counter-notification. Therefore, if z.B. the tenancy agreement provides that the tenant must issue a counter-notification within 28 days of receiving the landlord`s notice of lease notice and that this period is “essential”, then a tenant who does not comply with the rent increase set out in the rent check notice, although this verified rent may be significantly higher than the actual market rental at the time of the audit. It is therefore very important that landlords and tenants know exactly how the rent review procedure will work and whether they need to make newspaper reminders, perhaps three or five years earlier, to ensure that they meet the deadlines imposed by the rent reduction clause, which are explicitly expressed as “essential”.