As dollar rises everyday, so also do the prices of goods in the market. The price hike has not only affected the basic commodities we buy everyday, but also the amount payable as rent in different parts of the country.
After a tenant must have moved into a building and paid the rent of the first year, it is expected that he or she maintains the same energy in subsequent years of living in that same house. Unfortunately, some landlords may make this very difficult as they could decide to increase the rent by the beginning of the second year.
No landlord wants to run into a loss, therefore it is essential that he include a rent review clause in the tenancy agreement. This will enable him to obtain and compute from time to time the value that such premises might be at every point in time, so that he can subsequently review the rent when due.
There are four things a rent review clause should contain. They include:
1. Method of initiating the review:
It must be stated whether it will be by notice in writing, and the time within which the notice is to be given.
2. The time frame for the review:
The time when the rent will be reviewed must be stated. For example if it would be every year, and the date in which the rent will be payable.
3. The method of calculating new rent:
It must be stated if the opinion of property consultants will be needed to compute the new rent payable, or it will be solely at the landlord's discretion.
4. Procedure for resolving dispute of the new rent:
There is bound to be disagreement between the tenant and the landlord when the issue of rent increase arises. Thus, in the tenancy agreement, it must be included whether the dispute will be solved by arbitration, mediation or negotiation.
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