A Calderbank offer is the single most important cost-protection tool available to you in a contested commercial rent review — and your landlord's surveyor has almost certainly used one, or plans to. This article explains how the mechanism works, when to deploy it, how to draft it correctly, and what happens when you don't.

The figures used in the opening scenario are illustrative of a typical mid-sized office dispute. They are not drawn from a specific named matter.

The £40,000 Lesson

Picture a contested rent review heading to arbitration. You've paid £14,000 for your surveyor, £8,000 for legal advice, and the arbitrator's fee runs to £18,000. Total cost exposure: around £40,000, before you touch the landlord's professional fees.

The arbitrator awards a rent £5 per sq ft below the landlord's opening position — but £3 per sq ft above the figure your surveyor had been pushing. You've "won" in the sense that the landlord didn't get everything. Under the default costs principle in rent review arbitration, though, the arbitrator looks at who was closer to right. You were further away. Costs follow the event, and the event went against you. You pay a substantial share of the landlord's fees on top of your own £22,000. The total bill runs to something approaching £40,000.

Now run the same dispute with one change. Six months earlier, your surveyor wrote to the landlord's surveyor with a written offer to settle at exactly the figure the arbitrator eventually awarded. The letter was marked "without prejudice save as to costs." The arbitrator, shown that offer at the costs stage, sees the landlord refused a reasonable settlement that would have given precisely the outcome the arbitration produced. Costs from the date of the offer run against the landlord. The £40,000 exposure largely shifts the other way.

That mechanism is the Calderbank offer. Landlord-side surveyors use it as a matter of routine. Most unrepresented tenants have never heard of it.

This article explains how Calderbank offers work, when to make one, how to draft it, what mistakes to avoid, and what a landlord's Calderbank offer signals about their confidence in the substantive case.

Where the Name Comes From

The mechanism takes its name from Calderbank v Calderbank [1976] Fam 93, a Court of Appeal decision in a matrimonial finance dispute. The panel — Lord Justice Cairns, Lord Justice Scarman, and Sir Gordon Willmer — was asked to consider what should happen when one party had made a pre-hearing offer that the other unreasonably refused. Cairns LJ, drawing on analogies with Lands Tribunal practice and Admiralty sealed offers, suggested a formula for future cases: a party could make a written offer expressly marked "without prejudice save as to costs," which would be withheld from the tribunal until the substantive issue was decided and produced only at the costs stage. The principle spread rapidly into commercial disputes and into rent review arbitration, where it has been standard practice ever since.

The Civil Procedure Rules later codified a parallel mechanism for court proceedings in Part 36, which carries near-automatic cost consequences and applies only in litigation. Calderbank offers remain the working mechanism in arbitration and independent expert determination — the two forums where most contested rent reviews are resolved — because Part 36 has no application there. The statutory basis for an arbitrator's costs discretion is section 61 of the Arbitration Act 1996 (as amended by the Arbitration Act 2025), which directs arbitrators to award costs on the general principle that costs follow the event, except where the circumstances make that inappropriate.

For RICS-governed proceedings, both Surveyors Acting as Arbitrators in Commercial Property Rent Reviews (9th edition, reissued as an RICS professional standard in December 2023) and the companion document Surveyors Acting as Independent Experts in Commercial Property Rent Reviews (9th edition, 2014) expressly address fees, costs, and the Calderbank mechanism.

What a Calderbank Offer Actually Is

A Calderbank offer is a written settlement offer made during a rent review dispute, marked "without prejudice save as to costs" (or "without prejudice except as to costs"), which the arbitrator may consider only at the costs stage after the substantive award has been made.

The mechanics work in four steps:

1. The offer is without prejudice on the merits. The arbitrator cannot see it when deciding the rent. It carries no weight on the substantive question and is not evidence of anything on the facts.
2. It becomes admissible only after the award. Once the arbitrator has determined the rent, the parties can produce any Calderbank correspondence at the costs stage.
3. The arbitrator asks whether the offer was reasonable and should have been accepted. Reasonableness is assessed against the eventual award: if the award is at or more favourable to the offeror than the Calderbank offer, the offeror has "beaten" their offer.
4. Costs shift from the date of the offer. The party who unreasonably refused a reasonable offer typically pays both sides' costs from the date by which the offer should have been accepted.

The conceptual point matters: a Calderbank offer is not a settlement offer in the ordinary sense of the phrase. It is a cost-shifting instrument. Making one says, in writing and with full procedural weight: "this is the answer; if you refuse it and force a hearing, you will pay both sides' costs from today if I'm proven right." The pressure is real because the financial exposure is real.

Why Landlords Use Them and Tenants Often Don't

Landlords' RICS-accredited surveyors run Calderbank offers as standard. The larger landlord-side firms have template wording, internal sign-off processes, and a library of past awards against which to calibrate the pitch. Calderbank is in the professional toolkit; using it requires no special effort.

Tenants frequently arrive at a contested review without representation, or with a generalist surveyor who hasn't run a rent review arbitration in years. The asymmetry plays out like this:

• The landlord's surveyor makes a Calderbank offer pitched just inside the range the arbitrator is likely to land.
• The tenant doesn't recognise the offer as a cost-protection mechanism, treats it as an opening position, and rejects it without a formal counter-offer.
• The arbitrator awards within the landlord's Calderbank range.
• The tenant pays both sides' costs from the date the landlord's offer was made.

This is the £40,000 lesson, told from the inside. The reverse — a well-pitched Calderbank from a represented tenant — is equally powerful and considerably rarer from the unrepresented side. The mechanism is symmetrical. Its use is not.

The Four Cost-Stage Outcomes

The simplest way to see how Calderbank offers work in practice is to walk through the four scenarios that arise at the costs stage. In each case, assume a dispute over the reviewed rent of a commercial office in which the parties are £10 per sq ft apart.

Scenario 1: Tenant makes a Calderbank offer at £62/sq ft. Award lands at £60/sq ft.

The tenant offered to pay £2/sq ft more than the arbitrator awarded. The landlord should have accepted. Costs from the date of the offer typically run against the landlord: the landlord pays both sides' professional fees from that point. The tenant has secured strong cost protection despite the award running slightly below their offer.

Scenario 2: Tenant makes a Calderbank offer at £62/sq ft. Award lands at £65/sq ft.

The award is worse for the tenant than the offer. The tenant did not beat their own offer. Costs ordinarily follow the event: the landlord is the successful party and recovers costs in the usual way. The Calderbank offer has no protective effect.

Scenario 3: Landlord makes a Calderbank offer at £68/sq ft. Award lands at £65/sq ft.

The award is better than the landlord's offer from the tenant's perspective. The tenant beat the landlord's Calderbank. Costs ordinarily follow the event in the tenant's favour.

Scenario 4: Landlord makes a Calderbank offer at £68/sq ft. Award lands at £70/sq ft.

The landlord beat their own offer. From the date of the offer, costs typically run against the tenant: the tenant pays both sides' costs from that point. This is the scenario unrepresented tenants most often fail to anticipate when they receive a Calderbank offer and ignore it.

The arbitrator's discretion runs through all four scenarios. Section 61(2) of the Arbitration Act 1996 provides that costs follow the event except where in the circumstances it is "not appropriate." The arbitrator weighs the reasonableness of the offer, the conduct of the parties, and the proportionality of the costs to the sums at stake. A Calderbank offer pitched at the landlord's unamended opening position, with no genuine negotiating margin, may be treated as tactical rather than reasonable and given reduced weight. An offer genuinely within the realistic range carries real persuasive force.

The cost outcome of a rent review arbitration is determined as much by the Calderbank correspondence as by the substantive award. Tenants who treat it as paperwork get the £40,000 lesson; tenants who treat it as the central tactical decision get the cost protection.

When to Make One

Timing matters as much as content. Too early and the offer carries little weight; too late and you protect almost nothing.

Too early. A Calderbank offer made before the parties have exchanged evidence in any meaningful form is often treated as posturing. The arbitrator needs to assess whether the refusal was reasonable; if the offer pre-dates the evidence, it is difficult to say that rejecting it was unreasonable. An offer made before statements of case have been exchanged is almost certainly premature.

Too late. An offer made on the eve of the substantive hearing protects very little. The cost-shifting clock runs from the date of the offer — if most of the costs have already been incurred, there is nothing left to shift. A Calderbank offer issued the week before the hearing is a gesture, not a tactic.

The right window in a typical rent review arbitration running six to nine months from appointment is months two to four: after the surveyors have exchanged statements of case and the principal comparable evidence is on the table, but well before the arbitrator's bundle is finalised and the hearing date is set.

You can make more than one Calderbank offer. A first offer pitched aggressively to test whether the landlord will settle early, followed by a more carefully calibrated offer once the evidence is fully exchanged, is common practice. Each offer is assessed independently at the costs stage; the offer that most closely matches the eventual award carries the most weight. A withdrawn offer, however, cannot be relied upon at the costs stage. A revised offer creates two separate cost-protection points from two separate dates.

The Calderbank offer is a process, not a letter. Thinking of it as a single piece of paper misses the strategic value of sequenced offers across the life of the dispute.

How to Draft One: What the Letter Must Do

Calderbank offers follow a clear structure. Deviate from it and the offer may fail to do its job.

A valid Calderbank offer must:

• Be in writing. An oral offer carries no cost-shifting effect at the costs stage.
• Carry the correct marking. The letter must be headed "without prejudice save as to costs" or "without prejudice except as to costs." An offer marked only "without prejudice," without the "save as to costs" reservation, is inadmissible at the costs stage and cannot protect you. This is the single most common and expensive drafting error.
• State the offer with precision. A specific rent figure (£X per sq ft applied to the agreed measured area), the proposed review date, and any associated terms. Vagueness is not a feature here; it is a defect.
• Be capable of acceptance by reply. A letter that describes a "position" without the clarity needed for acceptance is a negotiating posture, not a Calderbank offer. The other side must be able to say "yes" without further negotiation.
• Include a time limit for acceptance — typically 21 days, shorter as the hearing approaches. An open-ended offer loses tactical weight.
• Address costs explicitly. A standard formulation: the offer is made on the basis that each party bears its own costs up to the date of acceptance, with costs from that date to be dealt with by the arbitrator if the offer is not accepted.
• Be sent through proper channels — surveyor to surveyor on valuation, solicitor to solicitor where legal points are live.

What to avoid:

• Conditional or hedged offers the other side cannot simply accept without further agreement.
• Offers bundled with non-rental matters (other lease terms, side letters) that complicate the costs assessment.
• Offers made "subject to contract" — these may not be Calderbank-effective.
• Multiple inconsistent offers running simultaneously, which create confusion at the costs stage.

Tenants without surveyor representation should not draft their own Calderbank offers. The drafting is technical, the consequences of error are large, and the correct pitch requires comparable evidence analysis that a generalist cannot provide.

Arbitration versus Independent Expert Determination

Your lease may provide for arbitration or for independent expert determination — sometimes with the landlord's right to elect. The distinction matters for Calderbank purposes.

In arbitration, the Arbitration Act 1996 applies. The arbitrator's costs discretion under section 61 is express. Calderbank offers operate in their classic form.

In independent expert determination, the expert's powers depend entirely on the lease wording and the terms of appointment. Some leases give the expert express costs jurisdiction and the power to take Calderbank offers into account. Many give the expert no costs jurisdiction at all, in which case costs are shared equally by the parties as a fixed matter, regardless of outcome. A tenant who makes a perfectly drafted Calderbank offer in an expert determination with no costs jurisdiction has done nothing useful.

Check the lease wording before you rely on Calderbank protection in an expert determination. If costs jurisdiction is absent, the offer cannot do its protective work and the dispute resolution strategy needs to adjust accordingly. Where the lease offers a choice between arbitration and expert determination, that choice has direct Calderbank consequences — one of the quieter reasons it deserves professional attention.

The RICS Small Business Scheme: Where This Doesn't Apply

The RICS Dispute Resolution Service runs a Small Business Scheme for tenants with no more than two non-residential properties and a rateable value below £10,000 (£15,000 in London). Both parties must agree to use it. The scheme uses independent expert determination, not arbitration, and the expert issues a brief determination rather than a fully reasoned award. Each party pays approximately £510 including VAT, plus reasonable expenses.

In this scheme, Calderbank tactics are largely irrelevant. The fixed-fee structure means there is no meaningful cost pool to shift. If you are in the Small Business Scheme, the substantive case — your comparable evidence — is what determines the outcome.

For tenants outside the scheme, which is most office tenants in any reasonably-sized building, Calderbank offers are the central cost-protection mechanism from the moment the dispute enters arbitration.

Common Mistakes to Avoid

Based on how these disputes play out in practice, tenants make the same errors repeatedly:

• Treating a Calderbank offer as a negotiating opening. It is not. The offer must be within the realistic settlement range, not the aggressive opening range. Arbitrators identify tactical Calderbank offers quickly and give them reduced weight at the costs stage.
• Making no offer at all. Many unrepresented tenants reach the substantive award without ever making a written Calderbank offer. Cost protection requires the offer to exist.
• Marking the offer "without prejudice" only. Without the "save as to costs" reservation, the offer is inadmissible at the costs stage.
• Making the offer too late, after most of the costs have already been incurred.
• Failing to respond formally to the landlord's Calderbank offer. Silence is treated as rejection. A counter-offer, even at a different figure, protects your position and creates a costs record. Silence does not.
• Conflating Calderbank with Part 36. Part 36 applies in court proceedings. Its consequences — indemnity costs, enhanced interest, the additional CPR 36.17(4)(d) amount — are codified and near-automatic. Calderbank consequences in arbitration are discretionary under section 61(2) of the 1996 Act. They are real, but an arbitrator must be persuaded to apply them; they do not follow automatically.
• Assuming the offer works regardless of lease wording in an expert determination.

What a Calderbank Offer Signals About the Dispute

The decision to make a Calderbank offer, or not to make one, is itself a signal that a professional on the other side will read.

An early, realistic Calderbank from the landlord signals confidence. The landlord's surveyor has done the comparable evidence work and believes the arbitrator will land within their range. They are using Calderbank to force settlement at that number and to protect costs if the dispute goes to a hearing.

A Calderbank pitched at the landlord's opening position signals less confidence. They are trying to lock in cost protection at an aggressive number rather than at a realistic one. An arbitrator may give such an offer limited weight at the costs stage, precisely because it lacks a genuine negotiating margin.

No Calderbank offer at all can signal weakness. If the landlord's surveyor does not make a written offer, it may mean they are uncertain enough about the substantive outcome that they don't want to anchor on a number. That uncertainty is information.

The reverse reading applies when you make a credible Calderbank offer as a tenant. A well-pitched offer signals professional representation and confident analysis of the comparable evidence. Landlord-side surveyors read that signal and adjust their settlement thinking. Frequently, a credible tenant Calderbank offer triggers settlement before the substantive hearing — not because the offer is accepted on its terms, but because it tells the landlord's surveyor the tenant has serious professional backing.

Tenants who never make a Calderbank offer are not preserving their negotiating room. They are giving up cost protection for nothing in return.

FAQ: Calderbank Offers in Rent Review Arbitration

What is a Calderbank offer?
A Calderbank offer is a written settlement offer made during a dispute, marked "without prejudice save as to costs," which the tribunal considers at the costs stage after the substantive decision. It is not visible to the arbitrator or expert when deciding the rent.

Are Calderbank offers admissible in rent review arbitration?
Yes — at the costs stage. They are inadmissible during the substantive hearing. The sequencing is the whole point.

How is a Calderbank offer different from a Part 36 offer?
Part 36 applies in court proceedings under the Civil Procedure Rules and carries codified, near-automatic cost consequences under CPR 36.17. Calderbank offers apply in arbitration and expert determination, where cost effects are discretionary under section 61 of the Arbitration Act 1996 — real, but not automatic.

Who can make a Calderbank offer?
Either party. Both landlords and tenants use them. The mechanism is symmetrical; the practical use of it, in unrepresented tenant disputes, is not.

When should a Calderbank offer be made?
After the principal evidence has been exchanged but well before the substantive hearing — typically months two to four in a six-to-nine-month arbitration.

Do Calderbank offers work in independent expert determination?
Only where the lease gives the expert express costs jurisdiction. Without that, the offer has no mechanism to operate through. Check the wording before relying on it.

What happens if the award beats the Calderbank offer?
The offeror typically recovers costs from the date of the offer; the party that refused the offer pays both sides' costs from that date. The arbitrator retains discretion under section 61(2) of the Arbitration Act 1996, but an offer genuinely within the realistic range carries strong persuasive weight.

Does the offer have to be in writing?
Yes. An oral offer carries no cost-shifting effect.

Can I make more than one Calderbank offer?
Yes. Sequenced offers across the life of the dispute are common and effective. Each is assessed independently at the costs stage.

Does Calderbank apply in Landlord and Tenant Act 1954 lease renewals?
In PACT references (where renewal disputes are sent to a surveyor-arbitrator under the Arbitration Act 1996), yes — in exactly the same way as in rent review arbitration. In court-based renewals, parties can use either Part 36 or the court's discretion under CPR 44.2 to achieve a similar cost-protection effect.

What To Do Before the Next Exchange

Calderbank offers are the costs lever in UK commercial rent review arbitration. The mechanism is straightforward, the drafting is technical, the timing is strategic, and the financial effect is large — often the difference between recovering professional costs and paying both sides'. Landlords' surveyors run this mechanism routinely. Tenants without representation either absorb the asymmetry or get lucky.

If your rent review is approaching or already in arbitration, the question to ask your surveyor this week is simple: has a Calderbank offer been made, and if not, when should one be? The arbitration will resolve the rent. The Calderbank correspondence will determine who pays for it.

For the broader framework of how commercial rent reviews work — trigger dates, assumptions, disregards, and the arbitration process from start to finish — see our guide to commercial rent reviews.

For the costs of professional representation and what a rent review surveyor actually delivers, see our rent review surveyor costs guide.