Health Real Estate Tip of the Week: Rent Review - No Deadline, No Problem
Published 9 January 2018
While managing deadlines contained in rent review clauses may be an onerous process for managers of NHS estates subject to a large number of leasehold properties, care must be taken to comply with these deadlines so as not to lose the right to review (and almost inevitably increase) the rent. Even if not expressly set out in the clause, time limits may be implied for business efficacy and tenants may serve a notice making time of the essence to make any deadline absolute. However, a useful case has recently underlined the fact that time may only be made of the essence in this way where the wording of the lease allows.
Proxima GR Properties Limited v Spencer  UKUT 450 concerned a rent review provision entitling the landlord to trigger the review process at any time after the expiration of the twentieth year of the lease term (1 December 2005). The landlord did nothing, and the tenant eventually sent a letter in January 2010 purporting to make time of the essence and giving a deadline of March 2010. The landlord continued to do nothing until March 2016, when it finally triggered the review and subsequently obtained an expert determination. The tenant argued that the determination was invalid because the landlord had failed to deal with the review by the March 2010 deadline.
It was held that the determination stood. The tenant could only make time of the essence if there had been a time limit in the clause with which the landlord had not complied. The ability to imply a time limit for business efficacy did not apply where the clause contained express wording entitling the landlord to trigger the process "at any time". Without a deadline, time could not be made of the essence.
You should remain vigilant for any express or implied deadlines following this judgment, as the wording of the lease is paramount and must be carefully reviewed. However, if the lease permits a landlord to trigger review at any time, the courts will permit this too.