You will work individually, you will be acting as an Independent Expert, and you should have regard to the RICS Practice Statement and Guidance for surveyors acting as Independent Experts. You should provide a suitable signed statement of truth as part of your work.
You need to assume that you have been approached in connection with the following rent review provision (see 15 below) to provide a view on the following matters:
A) If the rent first reserved is £50,000p.a; the rent immediately before the date of rent review £50,000p.a and the Market Rent £45,000p.a then what will the rent be following the rent review?
B) If the rent first reserved is £60,000p.a; the rent immediately before the date of the rent review £60,000p.a and the Market Rent £67,500 p.a. then what will be the rent following the rent review?
C) Set out how you would (in some detail with examples, created if necessary) arrive at a Valuation as per 15(3) – and comment as to the importance and meaning/impact of each of the provisions at 15(4). Here it would be helpful for you to find office comparables or available property of a similar size to the suite here, and use these in your work. You may choice a location of your choice.
D) Finally, assuming that you are appointed to act for one party or another and the matter of determining a revised rent actually proceeds to third party explain fully the differences between that party acting as an Arbitrator and that party acting as an Independent Expert. (The lease below provides for only an Expert). If the lease gave you the option of which you could apply for in different circumstances which would you choose and why?
15 Rent Review
15(1) Date of review
On the expiration of the THIRD year (such date being “the Date of Review”) the rent FIRST reserved shall be an amount (“the Revised Rent”) equal to whichever is the greater of: 15(1)(a) The rent FIRST reserved immediately before the Date of Review; and 15(1)(b) The Market Rent of the Premises at the Relevant Date of Review as agreed between the Landlord and the Tenant or determined in accordance with the following provisions of this Clause;
15(2)(a) Procedure
The Landlord shall serve on the Tenant during the period of not more than 12 months nor less than 3 months before the Date of Review a notice specifying the Market Rent; 15(2)(b) If within 28 days of the Landlord’s notice the Tenant does not serve a notice on the Landlord objecting to the figure specified in the Landlord’s notice then that figure shall be the Market Rent.
15(3) Valuation
The Market Rent shall be the annual rent (excluding any Value Added Tax) obtainable in the open market for the Premises at the Date of Review for a term equal to the original term of this Lease commencing on the Date of Review as between a willing lessor and a willing lessee in the open market with vacant possession without payment of a premium on the terms and conditions of this Lease (including the provision for the review of rent) and assuming that:-
15(4) (a) (i) the Premises are then ready fit and available for immediate occupation and use in accordance with the Schedule of Condition attached; and 15(4) (a) (ii) the Landlord and the Tenant have observed and performed the covenants and the conditions in this Lease (but without prejudice to any rights of the parties in regard thereto); and 15(4) (a) (iii) the Premises or the means of access or any services thereto shall not have been destroyed or damaged; and 15(4)(a)(iv) the Premises have an area of 1,125 sq. ft. but taking no account of: 15(4) (b) (i) any goodwill attributable to the Premises by reason of the Tenant’s business; and 15(4) (b) (ii) any effect on rent of any works at the Premises (to which the Landlord gave its consent) except works carried out pursuant to an obligation to the Landlord or by or at the expense of the Landlord; and 15(4) (b) (iii) the Tenant’s occupation of the Premises; and 15(4) (c) The Market Rent shall be at the rate payable following the expiry of any rent free period or period at concessionary rent which might be granted on a new letting of the Premises
15(5) Expert’s decision
In the absence of agreement between the Landlord and the Tenant as to the amount of the Market Rent by two months before the Date of Review either party may require it to be determined by an Expert who shall be a Fellow of the Royal Institution of Chartered Surveyors with at least five years’ experience in a commercial practice of dealing with the letting and valuation of buildings like the Premises to be agreed upon by both parties of if they fail so to agree then nominated at any time at the request of either party by The President (or if he is unable so to nominate the Vice-President) for the time being of The Royal Institution of Chartered Surveyors and the fees of the President and the fees of any such Expert shall be borne and paid by the parties in such shares and in such manner as the Expert who determines the amount of the Market Rent shall determine but subject thereto in equal shares;
15(6) Representations
The Expert shall allow the parties to make written representations which may contain rental evidence and a rental valuation of the Premises and shall promptly pass details of any party’s representations to the other party inviting within fourteen days comments in reply to matters raised in the initial representations and the Expert shall determine the Market Rent having regard to the representations and replies;
15(7) Payment after Date of Review
Until the Market Rent shall have been agreed or determined the Tenant shall continue to pay the rent FIRST reserved at the rate payable immediately before the Date of Review but on such agreement or determination the Tenant shall pay to the Landlord any difference between the rent which would have been payable had the Market Rent been so agreed or determined before the Date of Review and the rent which has actually been paid together with interest at the Prescribed Rate from the quarter day when each part of such rent would have been payable until payment;
15(8) Memorandum
The Market Rent shall when agreed or determined be recorded by a memorandum prepared by the Landlord and signed by the Landlord and the Tenant and each party shall bear their own costs in connection with the preparation of the memorandum.
