Are you in the Know? Tenants and Commercial Leases

If you are a Tenant taking a Lease of commercial premises, it is important to take legal advice now to avoid unexpected issues arising throughout the Term of the Lease, or when you return the Premises to the Landlord.

Else Solicitors provides efficient and targeted advice to Tenants, focusing on their business needs. As experts in commercial property, we ensure you understand and are comfortable with all the terms of the Lease, particularly the following, the meaning and implication of which may not be clear to Tenants who are not well-versed in the language used in commercial leases:

  1. Rent Review – the amount of Rent paid at the outset of the Lease may be clear, but we ensure you understand the basis on which the Landlord may be able to increase the rent throughout the Term.
  2. Repair – are you required to keep the Premises in the condition it was in at the start of the Lease, or are you required to keep it in ‘good repair’, which means putting it in good repair if it is not already in good repair? Which parts of the Premises are you responsible for? Is this just the interior of the Premises (walls, floors, windows, etc.) or does it include parts such as the roof, foundations, and service media? What might the cost of repairs be likely to be?
  3. Alterations – are you allowed to make changes to the Premises, and if so how extensive can these changes be? Will you need the Landlord’s permission, and can the Landlord require you to remove all or some of these alterations at the end of the term?
  4. Compliance with Laws – does the Lease require you to comply with all laws affecting the property, even those which would usually be the responsibility of the freehold owner, such as energy efficiency, asbestos management and fire safety? What might the cost be to you for this?
  5. Service Charges – can the Landlord charge you for its costs of maintaining shared areas on an estate or in a building? How is this calculated, and is the amount of your contribution capped?
  6. Break Date – do you have the option to bring the Lease to an early end? What conditions do you have to comply with before you can do so, and can the Landlord refuse to let you break if you haven’t complied? Can the Landlord bring the Lease to an early end, and how would this impact your business?
  7. Security of Tenure – at the end of the Lease will you have an automatic right to renew? Or can the Landlord require you to leave the Premises without offering you a new Lease or any compensation?
  8. Stamp Duty Land Tax – are you required to pay tax to HMRC on the grant of your Lease? This is calculated according to the length of the Term and the amount of Rent. We will help you ensure a return is made on time, and the correct amount of tax paid, to avoid penalties and interest accruing.
  9. Land Registry – Before completion, we will review and advise you on any relevant aspects of the Landlord’s Land Registry title – for example, are there rights of access to and from the Premises? Does the Landlord need consent from a third party such as a management company or mortgage lender before they can grant the Lease to you? Does the Landlord hold the freehold interest in the Property, or does it own under a long Lease itself? If so, what happens if your Landlord does not comply with the terms of its own Lease? After completion, can you register or note your Lease on the Landlord’s Land Registry title to ensure you are protected should the Landlord sell the freehold, become insolvent, or – if it is a company – be struck off the register?

Contact Caroline Major or Katie Burgess today if you are a Tenant looking for advice on a proposed commercial lease.

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