RENT AND INTERIM RENT UNDER PART II OF THE LANDLORD AND TENANT ACT 1954 - AN OVERVIEW AND UPDATE

Oct 22, 2026

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Explains how rent is ascertained under Part II of the Landlord and Tenant Act 1954, focusing on interim rent and renewed leases. Clarifies that the court’s task under section 34 is a valuation exercise rather than discretion, anchored to the commencement date of the new tenancy. Summarizes the open-market approach, the willing lessor/willing lessee hypothesis, and how statutory disregards apply, while referencing leading authorities and recent interim-rent cases.

LanguageEnglish

CategoryResearch & Report

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Reading Time58 min

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RENT AND INTERIM RENT UNDER PART II OF THE LANDLORD AND TENANT ACT 1954: AN OVERVIEW AND UPDATE

RENT

Open market valuation: basic principles

RENT AND INTERIM RENT UNDER PART II OF THE LANDLORD AND TENANT ACT 1954: AN OVERVIEW AND UPDATE David Holland QC 1. It was difficult to give this talk any sort of “snappy” or witty title, so (as you have seen) I didn’t try. There is (as you will see) little that is new to say about the ascertainment of rent under section 34 of the 1954 Act. The relevant provisions have been around for over 50 years and are generally well understood. There have been, however, one or two recent interesting cases on interim rent. RENT 2. The first key point to note is that the rent under a renewed lease is the last matter to be determined. If there is any dispute about the terms or the term then these must be resolved before a court will decide upon the level of rent-see CARDSHOPS V DAVIES [1971] 1 WLR 591. 3. The relevant statutory provision is section 34 of the act. This reads as follows: “The rent payable under a tenancy granted by order of the court under this Part of this Actshall be such as may be agreed between the landlord and the tenant or as, in default of such agreement, may be determined by the court to be that at which, having regard to the terms of the tenancy (other than those relating to rent), the holding might reasonably be expected to be let in the open market by a willing lessor, there being disregarded— (a) any effect on rent of the fact that the tenant has or his predecessors in title have been in occupation of the holding, (b) any goodwill attached to the holding by reason of the carrying on thereat of the business of the tenant (whether by him or by a predecessor of his in that business), (c) any effect on rent of an improvement to which this paragraph applies, (d) in the case of a holding comprising licensed premises, any addition to its value attributable to the licence, if it appears to the court that having regard to the terms of the current tenancy and any other relevant circumstances the benefit of the licence belongs to the tenant.” I have emphasised the most significant passage. “Open market” valuation: basic principles 4. The first and fairly basic point to note about this provision is the nature of the court’s task here. As the House of Lords pointed out in O’MAY V CITY OF LONDON [1982] 2 WLR 407, whereas the court has an element of discretion in deciding upon the term and the terms of the new lease under sections 33 and 35 respectively, its decision under section 34 is a matter of valuation rather than discretion. 5. The valuation date is technically the commencement date of the new tenancy (see LOVELY & ORCHARD V DAEJAN [1978] 1 EGLR 44) . By reason of section 64 of the act, that date is technically some months after the date of any hearing. In practice the court will determine the issue on the evidence before it and will, effectively, determine the rent as at the hearing date unless there is, on the evidence, any reason to suppose that the market will alter in the supervening months. 6. The statutory formulation is, as I have stated, familiar and well understood. Very many commercial leases contain rent review provisions in similar if not identical terms. The courts have, over the years, elucidated certain key principles which bear repetition. 7. Despite the fact that there is no specific mention of there being a “willing lessee”(as opposed toa “willing lessor”) it is taken as read that there is such a creature, being implied from the fact that the hypothetical letting is on the open market. In DENNIS & ROBINSON V KIOSSOS ESTABLISHMENT [1987] 1 EGLR 133 (a rent review case) Fox LJ said that one had to assume that: The landlord is willing to let the premises. Equally, the supposed tenant is willing to take the premises. The notion of a letting in the open market between an unwilling lessor and an unwilling lessee (or between a willing lessor and an unwilling lessee) for the purpose of determining a reasonable rent makes no sense Dillon LJ said: The lease uses the phrases

FAQs

When is the rent under a renewed lease determined under the 1954 Act framework?

The rent is the last matter to be determined. Disputes over the terms or the term must be resolved before the court decides the rent level.

What does section 34 require for rent payable under a court-granted tenancy?

It provides that rent is agreed between landlord and tenant or, failing agreement, determined by the court by reference to what the holding might reasonably be expected to be let for in the open market, disregarding specified factors.

How does the “open market” valuation work for section 34?

The court performs a valuation rather than exercising discretion. The decision is treated as effectively the rent at the hearing date, and the “willing lessor” and “willing lessee” are hypothetical abstractions used for the assessment.

Oct 22, 2026

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