Vet rent reviews
Vickery Holman are currently instructed on a number of veterinary lease events. With many once small veterinary practices now becoming part of national veterinary groups, landlords may find that they are dealing with a much larger organisation than they were before.
The principles of dealing with rent reviews and lease renewals of veterinary practise remain largely similar to that of standard commercial property. Depending on the location and facilities of the practice, it can be compared to offices, industrial or retail property. There are however some differences to be aware of:
Lease length
Usually, lease length agreed in the majority of transactions is longer than for offices. A 15 year term with no break options is common. This is very different from modern office transactions, where 3-5 years is the norm. In rent reviews where a lease terms forms part of the assumptions, there must be consideration of whether differing lease terms in comparable properties effect the market rent for the subject property.
Fit out
Equipment and fit out of veterinary practices varies, from simple office and reception areas to more complex surgeries and x-ray rooms. These additions are likely to add rental value to the property. In every case, consideration of whether this increased value can be attributed to either tenant’s improvements or features within the building is needed to appropriately assess the market rent.
Parties involved an impartiality
Veterinary practices are often owned by one or several directors of the business. Situations occur where either the director/s retire but remain the landlords, or the business is sold to a larger organisation who runs the practice, often with the landlords working as veterinary surgeons for them. In these situations it is easy to have difficulty discussing and negotiating rent reviews or lease renewals as the parties are relatively connected. For a landlord in this situation, instructing a surveyor with experience in dealing with veterinary rent reviews and lease renewals is a good idea. They can analyse the market evidence and give an honest professional opinion of the market rent and/or lease terms that should be agreed. They can then negotiate the new terms on the landlord’s behalf and manage the process until completion of a new lease or signature of rent memoranda.
