We have extensive experience acting for landlords and tenants and negotiating lease agreements. These are some questions we are often asked
1.Do I need to take legal advice if I am just renting commercial premises or can I do it myself?
Entering into a lease is a major financial commitment for your business.
Leases can be 60-70 pages long so you need to ensure that you understand all the terms and are aware of the obligations and liabilities you would be taking on.
A lease is likely to be drafted for the benefit of the landlord, so it makes sense to have an expert review the lease at the outset to highlight potential issues and points which may be negotiated and to delete or amend any unfair terms.
A lease for a term of more than 7 years has to be registered at the Land Registry and there are other registration formalities that may apply to leases with a shorter term. There may also be a liability to pay Stamp Duty Land Tax, depending upon the length of the term and the amount of rent payable.
Therefore, taking expert legal advice to help you navigate a complex area of law is highly recommended. Our extensive experience in this field means we can negotiate a better deal for you and help you to avoid a costly mistake.
2.What are the advantages of taking legal advice before entering in to a lease?
If you enter into a lease without legal advice, you risk not understanding, at the outset, what you are taking on. Our experts will guide you through the process, explain the terms of the lease and the responsibilities and rights of both the landlord and the tenant and ensure that you understand the contents. Once you enter a lease it is legally binding, so it is important that you understand the commitments being made.
3.Do we have to reinstate the premises to their original condition when we leave or is this the landlord’s responsibility?
At the end of the term of the lease it is usually the case that the premises have to be returned to the landlord in accordance with the provisions of the lease. This means that the repair and decorating obligations have to be complied with and any alterations made would need to be reinstated unless it has been expressly agreed with the landlord that they can stay in place. Any damage to the premises following the removal of alterations has to be made good.
It is a good idea to discuss and agree with your landlord what needs to be done by the end the term and ensure that the works are carried out before the end of the term. The landlord may serve a schedule of dilapidations on you which sets out the work they have identified needs doing and the cost. This can be the basis of a negotiation and it is advisable to get the advice of a dilapidations surveyor if this occurs.
4.I am interested in taking a lease of commercial premises how can I negotiate the best deal for myself?
If this is something that you have not done before then take professional advice, either from a surveyor or commercial property solicitor. Tenant friendly provisions that may be agreed, if asked for, include:
- An initial rent free period (3- 6 months) to enable you to fit out the premises ready for trade
- A tenant only break clause to enable you to terminate the lease if it is not working out.
- A limited repair obligation, so you are not obliged to put the premises in any better condition than they are at the start of the term.
The landlord is likely to have a surveyor or agent acting on their behalf, remember that they are acting in the best interests of the landlord.
Research the market as best you can to inform yourself about the going rates for rents. Don’t be pressurised into rushing into a deal unless there is good reason. It often takes between 6 and 8 weeks to get a lease completed once terms have been agreed.
5.What are my rights as a tenant of commercial premises?
Once you have entered into a lease, provided that you comply with your obligations you will have the right to carry on your business without interruption from the landlord. Other rights will be included in the lease. There a number of points to consider such as rights of way and for services if the landlord owns neighbouring premises and what you can expect from the landlord if you want to assign or sublet the premises.
6.What do I do if I want to change the use of the premises?
Usually the lease will set out what the premises can be used for and if the use you wish to change to is not included then you will need the consent of the landlord to change the use.
As well as the consent of the landlord you may need planning permission to change the use, check with the local planning authority. The Town and Country Planning (Use Classes) Order 1987 (as amended) puts uses of land and buildings into various categories known as 'Use Classes'. There are some changes between Use Classes which are allowed under general development rights and do not require express planning permission.
If the premises you are interested in require a change of use planning permission before you can start to trade consider an agreement to enter into a lease conditional upon you first having obtained the required planning permission.
7.Can I make alterations to the premises in my lease?
This depends entirely upon what the lease terms provide for, some leases, e.g., a short lease of an office in part of a building will prohibit all but the most basic changes. Whereas a lease of a standalone building may allow more. If you do wish to change the premises discuss with the landlord and also establish if planning permission and/or building regulations approval are required. We will be able to advise you on the provisions relating to alterations in your lease.
8.My landlord is suggesting a significant increase in the rent at the next rent review, what can I do?
Check the rent review provisions in the lease. Usually rent review is to market rent in the area that the premises are located. If you are concerned about the level suggested, then take advice from a local surveyor who should be able to advise if what is being suggested is reasonable. Any proposed rental increase should disregard any improvements you have made to the premises.
9.What can I do if I no longer want the premises?
Leases are contracts under which you commit to take the premises and pay the rent for a set period of time (the term) you are committed to the premises for the duration of the term unless:
- You negotiated a break clause and can break the lease on a set date and end the lease early;
- The lease permits assignment, in which case you may market the premises and if you find someone who wishes to take over the rest of the term of the lease you can ask the landlord for consent to assign. The landlord must not unreasonably withhold consent to a request to assign but can refuse if the proposed assignee is genuinely not suitable. You may also be required to guarantee the assignee until the end of the term of the lease or until they themselves assign so this may not be a clean break;
- The lease permits underletting, in which case as above you can ask the landlord to consent to an underletting. In that case you would remain primarily responsible for the premises and would still have to pay the rent and deal with handing the premises back at the end of the term.
- You can negotiate a surrender with the landlord. The landlord is under no obligation to agree to this but may be persuaded to do so at a cost.
You should understand these options when you take a lease and if you need further advice contact one of our Commercial Property Team who will be able to advise you.
10.The landlord is refusing to renew the lease of my commercial premises. What can I do?
If you have what is known as security of tenure, at the end of the term of the lease you are entitled to a new lease on substantially the same terms as the current lease, at market rent. This is unless the landlord opposes you having a new lease on one of the grounds below:
- You have not paid the rent, have been persistently late in paying the rent or have breached the tenant obligations in the lease;
- The landlord wishes to redevelop the premises and can’t do what they want to do with you still there;
- The landlord wishes to occupy the premises for its own business; or
- The landlord has other suitable premises to offer you.
You are also not entitled to a new lease if security of tenure was excluded by a special statutory procedure before the lease was completed.
Opposing you having a new lease requires the service of a notice by the Landlord, if you receive such a notice or have just been told that you may not have a new lease, contact Pickerings for expert advice on your options. In some circumstances, where the landlord has grounds not to renew your secure lease, statutory compensation is payable.