The Working Group on Transparency in Commercial Rent Reviews was established to look at the issue of rent reviews in leases completed prior to 28 February 2010 (which do not benefit from the banning order on upward only rent reviews). The Group published its report on 17 August 2010. It states its understanding that a ban on upward only rent reviews in relation to leases entered into prior to 28 February 2010 is not possible for legal and constitutional reasons and it recommends:

• The introduction of a non-statutory code of best practice for the governance of arbitrations to achieve the application of a uniform and transparent procedure for the resolution of commercial rent review disputes.

  The Group have drawn up a code and recommend its adoption on a voluntary industry wide basis. Without statutory effect, the code cannot over-ride either the provisions of the Arbitration Act 2010 or the lease which govern arbitration.  

 

• The establishment of a statutory public database of letting agreements and rent reviews in the commercial property market to promote transparency to facilitate awards demonstrably consistent with true market values for comparable properties.

  Under this proposal the database would disclose all relevant information concerning the letting including side agreements and concessions, notwithstanding any confidentiality clauses.

Ancillary to those two recommendations, it suggests that certain key matters be considered by parties when agreeing rent review provisions in leases and provides advice in respect of such key matters.

It remains to be seen whether the recommendations will secure support and be progressed and, if they are, what impact they will have on rent reviews of leases completed prior to 28 February 2010. Parties who made submissions to the Group are listed in the report but given the controversy surrounding rent reviews, it is striking how few property market participants made submissions.

It is expected that the Minister will be keen to follow through on at least one of the recommendations at an early stage – the introduction of an arbitration code is the easier to address. A reliable property database will be much harder to achieve and is likely to be met with resistance.  Confidentiality is expected to prove a major stumbling block and the introduction of a database may prove to be a disincentive to landlords giving concessions, which may not be in the interests of the market as a whole.