Ex­or­bi­tant in­crease on ter­mi­na­tion

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LAND­LORD VS TEN­ANT It is of­ten said by prop­erty land­lords that the best — and in­deed the only — time when rental pay­ments on a lease can be raised sig­nif­i­cantly is when one ten­ant leaves and an­other moves in.

Un­til then the land­lord has to abide by the an­nual rental in­creases that are stip­u­lated in the lease agree­ment — and these are usu­ally in the re­gion of 10% and sel­dom higher than 12%. What hap­pens if af­ter the lease ex­pires the agree­ment says that the ten­ant has the op­tion to re­new at an un­stip­u­lated price? This sit­u­a­tion arose in a court case (Beau In­vest­ments v Mav­er­ick Trad­ing) to which Gra­ham Leslie, MD of Gre­eff Prop­er­ties, has drawn at­ten­tion. The land­lord de­cided the time had come for a sub­stan­tial in­crease and in­formed the ten­ant. The ten­ant re­garded the in­crease as ex­or­bi­tant, re­mained in oc­cu­pa­tion but re­fused to pay the full amount. “Many peo­ple would have thought that the op­tion clause en­ti­tled the ten­ant to as­sume that the pre­vi­ous rate of in­creases would be con­tin­ued, but this was not the way the court saw it. They ruled that, in the ab­sence of any spe­cific agree­ment on this mat­ter, the land­lord was within his rights and or­dered the evic­tion of the ten­ant,” said Leslie. This case, said Leslie, will no doubt strengthen the con­vic­tion among many peo­ple that the law is weighted in favour of land­lords.

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