When the rent can’t be agreed:
arbitrator or expert?

Most rent reviews settle. The ones that don’t get interesting.

The great majority of commercial rent reviews are agreed by negotiation. Two surveyors exchange evidence, argue about it, and arrive at a figure both sides can live with. But some do not settle, either because the evidence genuinely points in different directions or because one party has simply dug in. When that happens, the lease provides for a third party to decide. And the kind of third party you end up in front of changes almost everything about how the case should be run.

The trouble is that most people only think about who decides once they are already in dispute, which is far too late. The choice should shape the strategy from the first letter. So this is how I think about it.

Most reviews settle. Some don’t.

A rent review is, at heart, an argument about open market rental value on a set of hypothetical lease terms that the lease itself dictates. Where the comparable evidence is reasonably clear, the two surveyors usually close the gap. Where it is thin, contradictory, or capable of more than one honest reading, they sometimes cannot, and the lease then sends the matter to a third party for a binding decision.

That referral is not a failure. A well-run review is prepared from the outset as though it will be determined, precisely so that it does not have to be. The cases that settle on good terms are almost always the ones that were ready not to settle at all.

Two routes, two different animals.

Under a typical rent review clause, an unresolved review is referred to one of two people: an arbitrator or an independent expert. They sound interchangeable. They are not. They work under different rules, reach their decisions in different ways, carry different risks, and reward different tactics. Knowing which one your lease specifies, before you are anywhere near a dispute, is part of running the review properly.

The arbitrator: judge of the evidence.

An arbitrator is, in effect, a quasi-judge. They are governed by the Arbitration Act 1996, and they decide the case on the evidence and submissions the parties put in front of them. They are not there to go off and find their own evidence or substitute their own opinion for what has been argued; their job is to weigh what each side has presented and produce a reasoned award.

That award is binding, with only narrow routes of challenge: a serious irregularity under section 68, or an appeal on a point of law under section 69, both of which are difficult to run and rarely succeed. An arbitrator also has powers over costs, so the losing party can end up paying for the reference. The practical consequence is simple: arbitration rewards the side that builds the better-evidenced, better-argued case, because the arbitrator can only decide on what is put in. If you hold the stronger evidence and present it well, arbitration tends to suit you.

The independent expert: their own knowledge.

An independent expert runs on the opposite instinct. They are not bound by the Arbitration Act, and they are entitled, indeed expected, to use their own knowledge and investigations. They can rely on transactions they know of that neither party has cited, apply their own judgement, and reach a figure that is genuinely theirs rather than a choice between the two submitted to them.

Their decision is usually final and binding with effectively no appeal, even where one party is convinced it is wrong. And, unlike an arbitrator, an expert can be sued for negligence if they are careless, which is the trade-off for that finality. The practical consequence here is the mirror image of arbitration: an expert determination turns on the expert’s own view of value, so it rewards a credible, defensible position over a maximalist one. Throwing an aggressive figure at an experienced expert who knows the market tends to backfire.

— The distinction in one line An arbitrator decides on what you put in front of them. An expert decides on what they know.

Which one, and who chooses.

Which route applies is a matter of the lease. Some clauses specify an arbitrator, some an independent expert, and some leave it to be agreed between the parties or fixed on appointment. That is why I read the review clause at the start of a review and not at the end: it should colour the whole approach. Where the lease gives a choice, the decision itself becomes tactical. A party with strong evidence and the appetite to argue it may prefer arbitration; a party who wants a quick, final answer on a narrow question of value may prefer an expert.

If the parties cannot agree on the individual to appoint, the appointment is usually made on application to the President of the RICS, who nominates a suitably experienced surveyor. Either way, the identity and the type of the third party are worth settling early, because they determine what a winning case actually looks like.

Lease renewals: the court, or PACT.

A lease renewal under the Landlord and Tenant Act 1954 is different again. If the new rent and terms cannot be agreed, the default is that the County Court determines them. But the court is not a specialist in rental value, and litigation is slow and expensive for what is often, at bottom, a valuation disagreement.

PACT (Professional Arbitration on Court Terms) is the alternative. It lets the parties agree to have the matter decided instead by a surveyor, acting as either an arbitrator or an independent expert, appointed through the RICS. For a renewal that is really about the rent rather than a point of law, PACT usually produces a better-informed decision, faster and at lower cost, which is why I will often recommend it. The full mechanics of renewals sit on the rent review and lease renewal service page.

What it means for the case.

The thread through all of this is that the forum shapes the fight. Before I take a position in a review, I want to know who is likely to decide it, because an arbitrator and an expert reward different things. For an arbitrator, the priority is evidence and argument, marshalled and presented so that a quasi-judge can follow it and accept it. For an expert, the priority is credibility: a figure and a rationale that an experienced valuer will recognise as sound.

In both, the work that wins is done early. The schedule of comparables, the close reading of the lease, the anticipation of the other side’s case, all of it built from day one as though it will be tested. And this is where the line between negotiation and expert evidence blurs, because once a determination is in prospect the surveyor presenting the case is, in substance, giving expert evidence, and it has to be prepared and stand up as such. That discipline is the same whether the matter settles over a coffee or in front of an arbitrator.

If you have a review or renewal heading towards a third party, or you simply want to know which way your lease points before it gets there, the rent review and lease renewal service page sets out how I work, and I am happy to talk a matter through before any formal instruction.