Is it worth triggering a Rent Review or Notional Rent appealing?
We are frequently asked by Landlords and GP Partners (owner-occupiers) whether a rent review is worth triggering or a Notional Rent appealing. Typically, the concern arises from whether the time taken to complete the review is worth potentially receiving a minimal increase on the rental income.
Notional rent reimbursement for owner occupied premises and lease rents for tenanted properties generally follow a three yearly rent review pattern. (This can sometimes be five yearly).
Solution
Our opinion is that you should always review the rental income at a property to ensure it is at the correct level. Furthermore, it should be noted that any upwards movement in rent not only increases the level of income received but in most cases the capital value of the property is likely to increase as well.
As a guide, an uplift of £1,000 per annum is likely to enhance the capital value of a medical centre in excess of £15,000. Alongside this, the higher the rental income, the more attractive a property is likely to become to investors.
The possible increase a property may achieve is dependent on several factors, including whether:
- There have been rental increases for similar properties in the local area.
- There have been improvements to the property and the rent review date.
- Other factors include the specific characteristics of a property such as the internal specification, usable floor area and age of the building.
The initial rental assessment from the NHS/CCG/District Valuer to a practice is an initial opinion and not negotiated.
Getting expert advice
It is prudent to have healthcare specialist surveyors review an initial assessment if Notional Rent, or the passing rent if there is a lease is in place. This will ensure that the rent is agreed or determined at the correct level in line with the market. Aitchison Raffety are able to help in this respect.
If you’ve received an initial Notional Rent assessment or have a lease which has an outstanding rent review we can advise. Please get in touch for a discussion and advice free of charge in the first instance. Contact our healthcare team on 01727 844 555 or via email to healthcare@argroup.co.uk.
Article written by Nathan Young, Surveyor – Healthcare