Rent Review Clause in a Depressing Economy

Abstract

The enforcement of the Rent Review Clause in a lease is very controversial. It is a matter of utmost importance to the landlord to receive good returns for his real property investment, in view of current hyperinflationary trend in Nigeria. It is one of the most litigious areas in the Law of Landlord and Tenant. Most of these cases are rarely reported because over 90 percent of them end up at the Rent Tribunals, Magistrates' and other Courts of Inferior Records and do not often go to appeal. This article looks at the current pervading economic crisis in Nigeria which has placed the Landlord in a disadvantaged position. Instead of the Landlord to enjoy upward rents review at periodic intervals, to commensurate his real property investments, he is compelled by the market forces to reduce rent to accommodate tenants whose partner or bread-winner had lost jobs, encountered business failure or leave his property vacant and un-let for considerable period of time, because of lack of ability to pay by the prospective tenants. This paper attempts to examine the operation of the Rent Review Clause, its applicability in residential lettings during the economic boom, non-applicability in Commercial Lettings, Government Lease and the present reversing or descending trend resulting into decrease in the fortune of the landlord, to the advantage of low-income tenants whose class of income the landlord is compelled to accommodate d ue to the declining economic circumstances.