The recent case of W (No 3) GP (Nominee A ) Ltd and another v JD Sports Fashion Limited has provided an interesting insight into the courts approach towards finding in favour of turnover rents.

This case involved the lease renewal on a retail unit in Derbion Centre in Derby. The existing lease contained a turnover rent provision. Her Honour Judge Finn sitting in the County Court found that a turnover rent is tenant specific and depends on the turnover of a particular tenant and the nature of it’s business. It sits uneasily with the provisions of the Landlord and Tenant Act 1954 which governs the terms of a new lease and particularly the assumed disregard of the tenants occupation, goodwill and improvements.

The court found that a turnover rent may be appropriate in some cases where the nature of the business is clear, the likely turnover is discernible, and the assumed disregards are of little or no consequence. The lease of a car park was sighted as an example.

In this case a review of the comparable evidence demonstrated that rents had decreased in recent years to the extent that a turnover rent, in these circumstances, was unlikely to  result in an open market rent and was not appropriate. The court ordered a fixed rent in the lease.

 Although this is only a County Court decision it does appear, in the case of retail and leisure properties where the identity of the individual tenant and its business are key, the court is unlikely to be in a position to order a turnover rent on a statutory lease renewal, unless the parties agree.

Watch this space for further updates on turnover rents as further court cases are decided.