Image
Interim Rent Disputes
Interim rent usually comes up in cases of unopposed lease renewals. It’s the rent a business tenant pays while their tenancy continues under the Landlord and Tenant Act 1954. Either the landlord or tenant can ask the court to decide the interim rent, but only after a formal notice (called a Section 25 or Section 26 notice) has been served to start the lease renewal process.
A Section 25 notice is sent by the landlord and either opposes or suggests terms for renewing the lease. A Section 26 notice is sent by the tenant to request a new lease. These notices are required by law and start the official process for either renewing or terminating a business lease.
After one of these notices is properly served, either party can ask the court to set an interim rent — a temporary rent paid during the time between the end of the current lease and the start of the new one. The interim rent starts from the earliest date the tenancy could have ended according to the notice, which might be earlier than the date actually shown on the notice.
Because of this, the timing and details in the Section 25 or 26 notices are very important, as they potentially affect how much rent is payable during this interim period.
Disagreements sometimes happen over how much interim rent should be paid. Whether you’re a landlord or tenant, our experienced real estate dispute solicitors can guide you through the whole process.
Amount of Interim Rent
When the lease renewal is for the entire property and the landlord does not oppose giving a new lease to the tenant, the interim rent will usually be the same as the rent for the new lease. This is called the "statutory assumption."
However, upon application, the court can depart from the statutory assumption where:
1. There has been a “substantial change” in the market conditions from the time upon which the interim rent was due to commence, and the date that the new tenancy is granted.
Here, the landlord or tenant would need to show that the interim rent is significantly different from what the court would have set if the new lease had started on the date the interim rent became payable. If that’s proven, the court may set the interim rent based on what it would have decided at that time.
2. The terms of the new lease are “substantially different” from the old.
Here, the court may apply a different interim rent when the new lease has terms that are either much “stricter” or much “lighter” than the old lease. In these cases, the court will decide on an interim rent that is fair and reasonable for the tenant to pay.
When the lease renewal is opposed or only covers part of the property, the interim rent will be set based on what’s reasonable for the tenant to pay. The court will use its usual rent-setting rules but will treat the tenancy as if it’s a year-to-year lease for the whole property. This often results in rents that are much lower than open market rates, because the tenant has a longer lease with security of tenure.
Interim Rent Disputes and Valuation Evidence
Before asking the court to decide on interim rent, it is important to get expert valuation advice. If the interim rent is expected to be higher than the current rent, the landlord will usually want to apply. But if it is likely to be lower, the tenant may want to make the application instead.
Making an Application for Interim Rent Determination
An application to have the interim rent determined by the court can be made as soon as either a Section 25 or Section 26 Notice has been served to start the lease renewal process under the Landlord and Tenant Act 1954. This application may be submitted either as a standalone request or as part of the lease renewal proceedings, where the court can also decide the terms of the new tenancy if the parties cannot agree.
It is important to note that the application must be filed within six months of the termination of the “relevant tenancy.” The exact termination date will depend on how the new lease is ultimately agreed and documented. Because timing is critical, seeking early legal advice is essential to ensure all deadlines are met.
If the interim rent application is made as part of broader renewal proceedings, discontinuing those proceedings - whether unilaterally or by consent - does not automatically end the interim rent application. Therefore, care must be taken to ensure all parts of the case are properly concluded to avoid complications.
Contact Our Team Today
The issue of interim rent is rarely straightforward, but our expert team of real estate disputes lawyers are specialists in asserting and defending interim rent claims. Our experts are able to guide you through this complex area of law from beginning to end.
To find out how our expert team of real estate disputes lawyers can help you, contact us today on 0330 123 1229, send us an email via info@smithpartnership.co.uk or complete our contact form.
