Commercial Sub-lease: Can The Rent Be Raised And How Much

A tenant – landlord, who has sub-leased a part of his / her commercial building on a month-to-month basis, has not raised the rent for four years. Now, he / she feels it is time to do so, but is confused as to whether the rent can be raised, including how much it can be raised for the sub-let portion of his / her commercial rental unit.

The answer is that raising the rent after five years is an understandably reasonable move, since every landlord would like to get true market value for his / her rental property. However, since you too are a tenant sub-leasing his / her rental unit, it is essential to check your own lease to ensure there is no clause in it, restricting you from sub-leasing it at a rental rate higher than what you are paying as rent, or would pay for the portion you are sub-leasing. This clause prevents and constrains you from profiting by charging a higher rent from sub-leasing your rental unit to a sub-tenant.

For month-to-month commercial property tenants, a landlord is allowed to raise the rent by giving 30-days advance notice, but check the sub-lease to see, whether you can do so for the sub-leased portion of your rental unit. At the most, your month-to-month tenant will disagree with the raise and decide to move out.

To soften the blow of a rental increase, perhaps, rather than delivering the news couched in the formal, legal jargon used by lawyers, it would be a far better idea to discuss and plan the rental increase with the tenant in advance,. As to how much should you raise the rent by? Look to the marketplace rental values, which will impose a limit on the rent charges, or the willingness of your tenant to suffer a rental increase.