Transactions with Leases

The Law Department has experience in dealing with a broad range of issues concerning commercial leases, managing these on behalf of either the landlord or the tenants.

If you are considering leasing a property or want to find commercial space for your organisation the terms of the lease will need to be carefully considered and reported on. These terms can include:

  • If the property is produces an income
  • The terms of the tenancy documents
  • Matters which can impact on the value (eg lease length, break clauses, rent review clauses, tenant payment obligations, existence of guarantors etc).

Usually any transaction involving a lease is more complicated than freehold conveyancing and will require more extensive legal advice.

The types of issues which can cause problems on commercial leases include but are not limited to:-

  • Appropriate length of lease/remaining terms
  • Whether the lease can be renewed upon expiry
  • Requirements for personal guarantees at the beginning of the lease or on the sale of the lease
  • Rent reviews
  • Break clauses
  • Repairing covenants
  • Rent deposits
  • Service charges
  • VAT status
  • Planning uses
  • Dilapidation clauses
  • Landlord consents
  • General position at end of the lease
  • General pre-contract enquiries regarding the property.

The Law Department’s experience with regard to business leases includes:-

  • Drafting and negotiating lease terms and contracts
  • Assignments (transfers of existing leases) and sub-letting
  • Enforcement of breach of lease
  • Forfeiture (where landlord claims an entitlement to terminate the lease, usually for non-payment of rent)
  • Issuing proceedings for the possession of premises
  • Issues arising from the Landlord & Tenant Act 1954 and lease renewals
  • Landlords' consents
  • Service charge issues
  • Recovery of possession
  • Removal of unauthorised occupants
  • Rent reviews/rent arrears.

There are a number of important issues that landlords and tenants should check, take advice and negotiate on:-

  • The chance of tenant default
  • Ease of re-letting if tenant defaults and time taken to find new tenant
  • Value of property
  • Acceptability of security for a loan
  • Cost of repairs and other expenses
  • Location
  • Rent deposit/personal guarantee.
  • Internal and external maintenance and repair. Tenants need to check whether they are responsible only for maintaining the premises in its current condition. Otherwise they find themselves liable for damage or wear and tear that occurred before it was occupied.
  • That the building meets fire and health and safety regulations
  • The correct insurance for the premises and building has been put in place
  • That the premises have the right classification of use for the business
  • Access requirements under the Disability Discrimination Act (DDA) are in place
  • How much is the rent, when it needs to be paid and whether VAT is payable on top
  • What the rent deposit is, how will it be held and in what circumstances can the landlord draw on it
  • What happens to interest earned and  when can it be refunded?
  • When the rent will be reviewed
  • If subletting is permissible under the lease for all or some of the space
  • If the building can be accessed at all times whether restrictions are in place
  • What, if any, break clauses are included (for long-term arrangements) where both parties can terminate early, and what is the procedure for doing this
  • Whether the lease is renewable.

The tenant should also check what is included and excluded from the rent, for example:

  • Rates
  • Buildings insurance and other insurances
  • Service and maintenance charges
  • Cleaning services
  • Shared services, such as parking, security, receptions staff
  • Utilities (gas, electric, water, telephone/communications lines, air conditioning etc.
Justin Selig
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7A Wellington Road
London
NW10 5LJ
020 7898 0585