Arrol is the tenant of a High Street shop in a UK town. The lease has three years unexpired at a rent of £230,000 on full repairing and insuring terms with five year rent reviews. Twelve years ago they carried out improvements with the written consent of Chadwick, the landlord. The improvements cost £320,000, and the landlord agreed to reduce market rent by 20% at each review. The current market rent of the premises on FRI terms is £320,000pa.
1 (b). Arrol has approached Chadwick and asked to surrender their interest in exchange for a new lease because they are trying to sell the business and the potential purchaser has concerns about the lack of security of the short unexpired term of the current lease.

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