Client: Soho Estates - Balans
Soho Estates, our client, owns the freehold of a restaurant in prime Soho in the West End, which was subject to a rent review in September 2006. The rent review clause was unusual.
To determine the total rent, it required the parties to initially agree the rent for the ground floor premises, which would be applied to a formula to calculate the rent applicable to various parts of the basement.
Our solution
Having advised on a number of other central London restaurants for Soho Estates and other landlords, our market knowledge meant we were well placed to advise on value. When the tenant’s agent refused to fully reflect the evidence of rental increases on comparable properties, we advised our client the matter should be referred to the Royal Institution of Chartered Surveyors (RICS) for the appointment of an Expert to determine the correct level of rent.
Result
After detailed negotiations it became apparent the tenant would still not offer a sufficiently high level of rent, so the parties made submissions and counter-submissions to the Expert. The Expert agreed that the tenant’s opinion of value was to low. He determined a rent at a level that was 15% in excess of the tenant’s valuation, resulting in a rental increase of 20% over the previous passing rent.
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