Commercial Property Rent Reviews
Updated: Oct 25, 2020
Real Estate Agencies managing commercial property on behalf of an investor owner have a number of responsibilities and agreed roles under the terms of a signed property management authority.
Commercial properties include shops, cafes, restaurants, retail outlets, offices, showrooms, workshops, warehouses, motels, hotels, holiday parks, marina berths, storage units, storage yards and many other premises housing business operations. All of these types of properties should have in place a lease or some type of written agreement between the Landlord and the Tenant.
Within these written agreements should be a section on rent reviews, what type of review, when and how they are to be completed. It would be pertinent for property owners to check their leases and diarise when annual rent reviews are due. Property managers should complete the annual reviews and advise the tenants and landlords in writing.
The effect of rent reviews not completed in line with the terms of a lease or written agreement, or completed incorrectly, can have an overall serious negative effect on the capital value (yield based) of the commercial property investment.
A number of managing agents and other property personnel do not understand the requirement for rent reviews, the how, when and why and either just do not complete these annual reviews or omit adjustments which are quite often necessary if the rental due date and the date of the annual rent review are not in line.
Commercial property management should aim to enhance the commercial asset value and the financial performance while generating maximum income throughout the life of the property for the property investor owner.
Are your clients and their commercial property investments generating maximum income within the terms of the lease or written agreement?