Commercial valuation dispute

alams

Poppy9 wrote: »

Is it recovering? Not judging by the increasing number of empty units in my city centre in the last 6 months.

If the other landlord has any business sense he will take what is offered as people starting up businesses are not exactly 10 a penny in this climate. How much people are paying on leases etc. is usually commericailly sensitive and they won't disclose to people so I doubt you know exactly what is being paid. You may know what was asked but that doesn't tell you what the agreed price is.

Perhaps he knows that the business in the new premises will be profitable. He is obviously doing okay by expanding in a recession. If anything him taking on a second premises strenghten his bargaining position with regard to your premises as he has an alternative if he can't get you to the rent he wants. Do you have an alternative tennant lined up? For each month your premises are empty it costs you £1000.

so what? Good on him that his business is doing well. He's making sure he stays in business by not agreeing to your high rent demands.

He is not living off your money. You are a landlord, he is a business. He has an agreed rent with you which he has paid.

He may well be able to afford it but that doesn't mean he has to pay it. He obviously has a good business head on him, whereas you have employed someone to value your business who seems clueless saying it's out of date, optimistic etc.

Of course it's your problem if he just refuses you rent increase demand. You then have an empty property costing you £1000 per month in lost rent.

Given we are in a recession and many businesses are folding not expanding, you are fortunate he's agreed to any sort of increase.

But if you have tenants lined up ready to move in when he vacates then go ahead and stick to your guns.

thanks for the advise!! thats why i posted on this site!!:beer:
im new to all this stuff, whereas my tenant has abit more experience so he's in a better position to get whats best for him, not necessarily whats best for me!!

thats why its best we go to arbitration to settle the rent formally, so none of us feels deprived!!

and ss70, mate the business is freehold matey, i could keep it empty for as long as li like, dont affect me!! but dont see why i should be doing any one any favours!! its a dog eat dog world!!!!!!!!! :rotfl:

ciano125

Depending on the lease, the person who "loses" at arbitration usually gets to pay the other sides fees. My colleague has just submitted a claim for £11,000 for his fees seeing as he won. Worth bearing in mind, but I would ask your surveyor what exactly is going on, and ask to see the comps the other side have come up. Actually, just leave him to it, he knows what he's doing and (no offence) but you dont, which is why you've employed him.

Just out of interest, what area of the country are you in?

ss70

alams wrote: »

and ss70, mate the business is freehold matey, i could keep it empty for as long as li like, dont affect me!!

This is illogical, please explain what you are going on about.

An empty building is not attractive financially for anyone. Insurance companies don't like insuring empty places and no one enjoys paying business rates on an empty place.

ILW

alams wrote: »

thanks for the advise!! thats why i posted on this site!!:beer:
im new to all this stuff, whereas my tenant has abit more experience so he's in a better position to get whats best for him, not necessarily whats best for me!!

thats why its best we go to arbitration to settle the rent formally, so none of us feels deprived!!

and ss70, mate the business is freehold matey, i could keep it empty for as long as li like, dont affect me!! but dont see why i should be doing any one any favours!! its a dog eat dog world!!!!!!!!! :rotfl:

It would cost you 12 granda year in lost rent.
Try to look at this as cold business, nobody is trying to "skank" you. Just maximise their profits.

ss70

Option A: Accept and receive £12k a year

Option B: Tell tenant £17k or walk, they walk and you are not only down £12k a year but rates and insurance could bring the loss nearer to maybe £18k a year (assuming rates are approx half rent value).

I think you might be 'skanked' with the second option.

SGE1

Why don't you just get it revalued, to get a more accurate post credit crunch valuation? Then you can actually determine what getting 'skanked' would be. At the moment you really haven't got a clue.

socrates

ss70 wrote: »

Option A: Accept and receive £12k a year

Option B: Tell tenant £17k or walk, they walk and you are not only down £12k a year but rates and insurance could bring the loss nearer to maybe £18k a year (assuming rates are approx half rent value).

I think you might be 'skanked' with the second option.

I do not think you really understand how commercial leases work - there is no such thing as walking away.

What we are discussing here is a rent review - if it is not agreed the tenant continues to pay what he is paying now until a settlement has been reached - at that point it gets backdated to the date of the rent review.

Also this is an A3 use property - meaning he cannot just move next door and set up shop there - the tenant cannot walk away from the lease and the LL cannot get rid of him either.

I feel that there is a happy medium but its not like a residential property at all - which is why I suggested the OP go to LandLordzone - much more relevant to this type of question

ciano125

If it is for a rent review then the evidence needed will be at whatever date the lease states the rent should be reviewed at. In this case it may be that the rent review clause stated, for example, January 2008, hence why the Surveyor is valuing it at that date.

fc123

alams wrote: »

okay, firstly. the valuation was provided by my surveyor at the beginning of this year, at the same time as the 'credit crunch', so its not really that much out of date, i hear apparently the market is recovering.

My tenant has opened another 13 business, further down along teh same road and his landlord is known to require high rent. Well anyways if he couldnt afford a decent rent for my property then how does he go and take on another property?? that first and also he has recently bought a house, and drives a £350 per month mercedes.

I aint being jealous but i just think my rent is too low and he is living off my money!!

I think my tenant can afford the increase but not with commitment to his new venture whereby he is most likely having to fork out to balance the new place.
But thats not my problem.

I haven't got to the end of the thread as yet but felt compelled to respond to this post.

You run a business leasing/renting commercial property.
The rents are based on the lettings of neighbouring properties...that is what sets the value.

The main beneficiaries of rent reviews are the surveyors who charge a fat fee to both parties to dance around with the values of recent lettings.

It is irrelevant to the valuatuon that your tenant drives a Merc on 350 pcm HP or has 13 other successful ventures nearby....no re-read..just the one other.

In fact, your main problem could be that fellow LL in area have been doing deals on new lettings (long rent free periods), reducing existing rents but having them 'Cloaked'.
Google it aa you should know what that means for your business.

Your tenant could leave (even if the lease has personal guarantees) tomorrow and rent something comparable for less.


And your comment on being new to this.....well, commercial property is in for a toughy time so best get yourself informed for the future.

alams

socrates wrote: »

I do not think you really understand how commercial leases work - there is no such thing as walking away.

What we are discussing here is a rent review - if it is not agreed the tenant continues to pay what he is paying now until a settlement has been reached - at that point it gets backdated to the date of the rent review.

Also this is an A3 use property - meaning he cannot just move next door and set up shop there - the tenant cannot walk away from the lease and the LL cannot get rid of him either.

I feel that there is a happy medium but its not like a residential property at all - which is why I suggested the OP go to LandLordzone - much more relevant to this type of question

cheers mate!! someone who knows what they are talking about!!

yep, theres another 8 years remaining on the lease, I cant get rid of him, he cant walk away!