Further to our Real Estate e-update of 3 March - A Long-outstanding Rent Review Can Still Pack a Punch - we provide the following update for clarification on the issue of whether the case of Bello v Ideal View alters the law in Scotland as established by the cases of Banks v Mecca Bookmakers (Scotland) Ltd and Waydale Ltd v MRM Engineering:
Bello is an English case and the remarks in that case relating to the rent review could be no more than persuasive in Scottish Courts. Until such time as Banks and Waydale are overruled by a Scottish court, the law as established by those cases will remain good in Scotland.
In brief, Banks and Waydale establish that the position in Scotland is that, where time is not of the essence of a rent review provision, there is a danger that a landlord who does not take steps to effect a rent review will be considered to have abandoned its right to review if it continues to accept rent at the existing rate. For how long a landlord has to continue to accept rent in order to imply abandonment is a matter of fact and circumstance on which no definite advice can be given. In Banks and Waydale the periods were in excess of a year, but there is no saying that a shorter period would not suffice.
Best advice, in Scotland (and in England), from a Landlord's view point will always be to take steps to ensure that there can be no suspicion of abandonment, either by actually seeking to negotiate the review or, at the very least, by writing to the tenant to advise that the landlord is reserving its right to a review at a later date, notwithstanding that it is continuing to accept rent at the existing rate.
If there is some reason why a landlord does not adopt this approach it is possible that their lease provisions will provide an escape route. Most modern leases contain a clause to the following effect:
No demand for or acceptance of rent by the Landlord at a rate other than that to which the Landlord may be entitled following a review of rent shall be deemed to be a waiver of the right of the Landlord to require a review of the rent nor shall it personally bar the Landlord from requiring such a review.
Such a clause has never been judicially tested and there is no guarantee that it would successfully oust an allegation of abandonment.
From a Tenants' perspective, if acquiring a lease with a long outstanding review it would be sensible not simply to assume that it has been abandoned but to make further investigations.