Case study
77 St Johns Road, Clapham
Smith Price RRG was instructed to act for the landlord of a property on St Johns Road, Clapham, a prominent terraced property in a strong pitch in this fashionable south-west London location.
The challenge
Smith Price RRG was instructed to act for the landlord of a property on St Johns Road, Clapham, a prominent terraced property in a strong pitch in this fashionable south-west London location. The premises incorporated a shop plus self-contained offices over three floors above.
The background to this was that the tenant occupied under an unusual lease arrangement, where the lease commenced in 1961, was drawn for a term of 84 years and provided for rent reviews on the 20th, 41st and 63rd years. The rent was last reviewed in 2001 to £31,250 per annum, meaning the passing rent was massively below current market value.
The landlord had requested that the managing agents serve the Rent Review Notice in relation to the rent review due on 23rd September 2023. The rent review provisions, however, were antiquated and made time of the essence in relation to the notice.
Regrettably the notice was served incorrectly and not in accordance with the terms of the lease.
The results
As soon as we had the opportunity to review the lease and all supporting legal documentation, we were able to identify the issue in time and correctly advise the landlord, who rectified the mistake and saved himself considerable loses in both rent and capital value – the recovery of which would have involved risk, uncertainty and considerable legal and court costs.
Had this situation not been remedied, the landlord would have missed the opportunity to increase the rent for a further 21 years – meaning the rent would have stayed at 2002 levels until 2044.
As it was, after extensive research and negotiations we successfully secured a rental increase to £80,000 per annum.
The increase of £48,750 pa secured for the owner represents more than £1 Million in additional rental income over the remaining 22 years of the term over and above what he would have received if we had not been appointed in time to identity and remedy the mistake.
Furthermore, should the additional rent be capitalized, this would be worth over £500,000, so the total ‘Value Add’ to our client in this instance was arguably well in excess of £1.5m – and totally underwrites the importance to property owners to seek and pay for specialist professional advice.
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