Why is my rent higher than my neighbour's when he has more space?
A common misperception is that if the rent on a shop is £15,000, and you occupy the adjacent shop which is smaller, then your rent should be less, right?  Well, no, not necessarily.  There are various reasons why your shop rent could be higher, as there are many variables to take into account, not just size.

Rent is calculated initially by reference to “Zone A”  which is intended to allow different size and shape properties to be compared on a £ psf basis.  If the adjacent property equates to £40 psf, then that figure will be used as a starting point to value yours.  However, then you have to look at:
 
  • Lease differences – the two properties may have completely different lease terms, and these can affect the value.  If a lease doesn’t give you the ability to assign or sublet if your circumstances change, then you have a very inflexible lease.  This would be worth less than a lease which did allow assignment or subletting.  Alternatively, one lease may restrict you to only using the property for a specific use, such as a jewellers, whilst another may allow you to use it for any retail purpose.  In this scenario the second lease would be more attractive than the first.
  • Property differences – If your property has a wide frontage, this may be great for your display purposes, but it is the most expensive part of the property in terms of rent, as the first 20ft back from the frontage is considered to be the most valuable.  Therefore a property that is wide but short will be proportionately more expensive than a long and thin property of the same square footage.
  • There are other considerations such as the shop layout and whether parking is included in the lease which can also impact on the rent.
  • Timing is an important consideration.  If the rent on the adjoining property was agreed some years ago, has the economic situation changed which will be reflected in rents?  Has the location within the town changed over time?
These are just a few of the considerations that will be taken into account by a chartered surveyor when they are advising you on what your rent should be.  The variables will change depending on the specific property and leases involved, so as you can see, it is not as straight forward as it may first look.

If you want to find out what your rent should be, please contact us