Glossary
The longer the duration of the tenancy the more likely it is that the landlord will want to increase the rent during the term. There are 2 main types of rent review: (1) market rent review; and (2) index linked rent review. A market rent review will involve an expert identifying the rent that could be obtained if the premises were remarketed on the rent review date. An indexed linked rent will involve a relatively simple recalculation of the rent so that it increases in line with inflation. An indexed rent has the merit of simplicity and certainty for both parties. However in recent years the increase in general inflation has been far higher than the increase in property rentals, and so by agreeing an indexed rent review you could well end up paying a higher rent than would be justified on the open market.
Negotiation tip: a rent review can increase the rent to an unexpected level especially if you have negotiated a good rent at the commencement of the lease. To provide you with a plan B when the rent review arrives try and agree an option to terminate (or “Break”) the lease once the new rent has been determined.