How does it work?
The parties may agree on rent that increases over time or rent determined by the tenant’s turnover.
What are the benefits of this arrangement?
- For the tenant
The tenant has the opportunity to pay less at the start of their business activity, when their turnover is naturally lower. This allows them to establish their business without facing unaffordable costs. If the business performs well, the rent will follow the same trend.
- For the landlord
Letting office space is not always straightforward, so this method can sometimes help when a property is vacant! Rest assured that, to protect yourself, you can set a minimum rent.
Is this permitted?
The legislation on commercial leases stipulates that the rent must be determined or determinable: this means that, provided the procedure is clearly set out, there is no issue.
Can the rent be reviewed?
After three years, a tenant may, in principle, request a rent review, for example on the grounds of a fall in the property’s rental value. In the case of rent linked to turnover, case law has established that the tenant does not have this right because, in this instance, the rent is not linked to the building’s rental value.
J&J Properties
A question or a property project?
Our team supports you from advice to signing.
