Property Investment Analysis - Essay Example

In a series of cases, the wording of the lease agreements on rent review clauses was held to be upward only. In the case of Royal Insurance Property Services Ltd v Cliffway Ltd2 the lease agreement allowed the landlords to serve a notice on an increase in rent. One of the major questions that the Court had to address in this case was whether the lease allowed for a downwards review. The conclusion in this instance was that based upon the wording of the clause, provision existed only for upward revision, with only the landlord being able to initiate rent changes.

Similarly, in the case of Standard Life Assurance v Unipath Ltd3a majority of the Court of Appeal ruled that the provision in the lease agreement pertaining to rent review was an upwards only clause. In this case the Court also observed that the purpose of a rent review clause cannot necessarily be assumed to be on the basis of anticipating changes in money; it might also represent the desire on the part of investors to protect themselves against risk and allow for the certainty of income contained in a rent review clause.

Another problem that has been created in the sphere of rent reviews is that they provide for the landlord to initiate a rent review process by issuing a “trigger notice” and the validity of such notices has been an issue in the cases of Norwich Union Life Insurance Society v Sketchley plc.4 Letters from the tenants have been held to be valid counter notices in the cases of Nunes v Davies Laing and Dick Ltd5and British Rail Pension Trustee Co Ltd v Cardshops Ltd6 where the open market rental rate was the subject of dispute between the landlord and tenant.

The underlying commercial purpose behind the inclusion of a rent review clause was spelt out by the Vice Chancellor in the case of British gas Corporation v Universities Superannuation Scheme Ltd7 who stated: “in the absence of special circumstances, it is proper to give