The Legal Implications of Rent‐free Periods at Rent Review

Abstract

One of the features of the UK letting market has been the practice of giving new tenants a rent‐free period at the commencement of a lease. Such rent‐free periods seem to fall into one of two types. First, it appears that, even in a very buoyant market, most tenants are able to negotiate a modest rent‐free period for fitting out or, where the lease is a head lease, for arranging sublettings. These rent‐free periods (even where they are a slice of a longer rent‐free period) can be seen to have their own characteristics. They can be viewed as a one‐off concession at the commencement of the lease. Second, in a poor market rent‐free periods are used as incentives, in the sense that they are a direct alternative to an explicit reduction in the passing rent, and often form part of a wider package of inducements. These have an obvious and direct bearing on true rental value. Critically examines the various devices which have been used by those drafting rent review clauses to deal with rent‐free periods at review and comments on how these have been treated by the courts.

Citation

Murdoch, S. and Crosby, N. (1994), "The Legal Implications of Rent‐free Periods at Rent Review", Journal of Property Valuation and Investment, Vol. 12 No. 2, pp. 43-50. https://doi.org/10.1108/14635789410055877