Don’t get ripped off, use a solicitor to: Help you negotiate the best deal!
We will ensure the right questions are asked of the landlord, provide you with our experiences and comments on any extras and heads of agreements. We will review the title to the property, highlight any issues relating to the property, the landlord answers and the lease, assit you with any negotiations, help you calculate and pay any stamp duty and ensure the lease is properly registered so that you can rely upon it.
Contact: Likely Costs
| Rent Per Annum | Landlord |
Tenant
|
|
| More than 7 years | Less than 7 years | ||
| Up to £10,000 | £350 | £450 | £375 |
| £10,001 – £25,000 | £450 | £550 | £450 |
| £25,001 – £50,000 | £600 | £750 | £450 |
| £50,001 – £100,000 | £800 | £995 | £800 |
| £100,000 + | Call us | Call us | Call us |
Frequently Asked Questions:
How can you prepare before negotiating with a landlord / tenant?
What is so interesting about the word “demise”?
For how long will the lease be?
Why are 7 year or longer leases so much more hastle?
What is the 1954 ACT and how can it help me?
Why give incentives to potential tenants?
You are going to use the premises for what?
How can a tenant make alterations to the premises?
What are service charges and who pays them?
Why state insurance relating to premises?
Protect your back regarding the condition of the premises?
How does the lease state that the premises will be maintained?
So what else do I need to know about?
How can you prepare before negotiating with the landlord/tenant?
The better prepared you are for the negotiations, the better the result. To help you we have set out below a fairly standard heads of agreement with our comments. Read it through and you’ll know what to ask and why. Hopefully you will avoid expensive mistakes and you won’t waste time and money having to renegotiate throughout the legal process.
At the end of this document there is a blank heads of terms for you to take any negotiations.
How can you help us help you?
Whatever a lawyer may say they will aim to produce a balanced and fair lease that is only amended to reflect an individuals quirks that the landloard and tenant have agreed upon. This approach is actually quite sensible because no lawyer wants to report to their client that the whole transaction is held up or lost because they have been caught trying to be a smart arse!
The more information you have, the clearer the instructions you can provide at the outset. The clearer you are, the quicker the lease will be agreed, the fewer the re-drafts, the cheaper the job, the happier you will be.
What is so interesting about the word demise
This is often simply the postal description of the property!
Demise is simply lawyer speak for the description of the property being let. It can however be used quite cleverly to include and exclude parts of a building. Why is that important? Well whether say the roof joists or the structural walls are or aren’t included in the ‘demised premises’ affects who is responsible for fixing them if they go wrong.
It is extremely helpful therefore if you think about the structure and shape of the building being let
(a) find out what the boundaries of the property are on both a vertical and a horizontal plain.
(b) provide us with a plan of the premises showing not only the boundaries but also common areas, parking, access routs etc.
(c) tell us whether it is part of a bigger building or whether it is a free standing unit.
(d) tell us what type of building it is; Victorian shop or industrial park tin shed.
(e) Are there any common areas, stair wells, toilets, parking spots etc which you require access over and if so consider who will be responsible for them?
(f) tell us whether you have agreed to the provision of car parking spaces, if so how many and where?
Who is the landlord anyway?
This should identify EXACTLY who owns the property? Is the owner a company, a charity or trust or an individual? Please provide their full name and address? What is their company number? Who is authorised to sign the lease?
Ll’s representatives: Who are the Landlord’s Solicitors and who are their Agents?
Who is the tenant anyway?
This should identify EXACTLY who is to rent the property a company, a charity or trust or an individual? What is their full name and address? What is their company number? Who is authorised to sign the lease? Do you envisage any change in the Tenant either through restructuring, incorporation or sharing the property with another business or part of the business?
T’s representatives: Who are the Landlord’s Solicitors and who are their Agents?
For how long will the lease be?
How long is the lease for? What are the start and end dates? If you are proposing to enter the property a month early so as to allow ‘fitting out’ it is generally usual to bring the start date of the lease forward so as to include this period.
LANDLORD -Bringing the start date forward protects the Landlord since he knows the Tenant must continue with the lease once the property has been altered and he knows the Tenant must keep the property in repair.
TENANT – Bringing the date forward protects the Tenant since he may be investing time and money in sorting the property out and he wants to know he’s got the right to use the property once it’s just right.
Why are 7 year leases or longer so much hastle?
Please note if the lease is to be longer than 6 yrs 364 days it will need to be registered at the Land Registry. There are a number of knock on consequences. (1) Land registration fees (2) the need to provide higher quality plans of the premises (if a lease of part) the increased risk of the Tenant having to pay Stamp Duty both on the grant of the lease and on every rent review. See [_________] if you want to calculate whether Stamp Duty will be due. Try adjusting the length of the lease to see the effects on duty payable.
Why do I need a break clause?
TENANT – Yes you are hoping the new premises will suit you down to the ground but do you really want to be stuck with the premises for ever and a day – what if business isn’t what you hoped or indeed what if it’s booming and the premises are too small? It is fairly normal at the moment to agree a break clause somewhere around 18 months to 2½ yrs.
LANDLORD – Well we are where we are, roll on the days when we can hold out for straight 10 year lease. Agreeing to a break clause will help you persuade a nervous tenant to give it a go. Also if you are thinking about redevelopment, converting the property to residential or simply going back into the property yourself a break clause (with a suitable 1954Act opt out) might actually suit you.
TENANT/LANDLORD – We have in the past seen break clauses used quite imaginatively. For example if a Tenant is desperate to move in but there are planning permission or access issues we have seen break clauses inserted which only operate if the local planners/land owners become sticky.
What is the 1954 ACT and how can it help me?
In 1954 the government gave commercial tenants a significant number of rights. Fundamentally it was felt unfair that established business were being held to ransom by Landlords when their leases expired. Until then many were faced with a choice; either pay a premium or an excessive rent or be forced to move with all the costs and disruption that that caused. These rights continue today. Businesses are entitled to a new lease on a fair rent when their old lease expires. If the business is forced to relocate for one of the permitted reasons within the act, the Tenant is entitled to compensation. If the Tenant is forced to leave behind improvements to the property the Tenant is entitled to some compensation for losing these. NOTE: The compensation is complex to calculate and since it is pursuant to a formula it does not necessarily compensate the Tenant for the whole of his loss.
It is possible to opt out of the 1954 Act protection regime. Many Landlords are currently insisting upon Tenants agreeing to this. There doesn’t appear to be any difference to the rental obtained on property with or without the 1954 Act protection.
Tell us is this tenancy to be with or without the 1954Act protection scheme?
Preliminary matters?
Is the Landlord going to carry out any works to the premises prior to the Tenant entering into the lease if so if would be extremely helpful if you could list;
(a) What work is to be done?
(b) At who’s expense?
(c) In what time scale?
Are there any planning permissions or other regulatory matters to sort out prior to committing to the lease? If so;
(a) What is required?
(b) Who is obtaining it?
(c) At who’s expense?
(d) In what timescale?
Is there a sitting tenant? If so is there an existing lease to be surrendered? Please provide details of;
(a) the sitting tenant
(b) their agents
(c) what has been agreed with them
Why give incentives to potential tenants?
Is the Landlord providing (or receiving) any incentives for the Tenant to take the lease? The most common form is a rent free period for the Tenant whilst fitting out. At the moment rent free periods of up to 6 months are not uncommon in Warrington. Please provide details.
You are going to use the premises for what?
What are the premises to be used for? If you are the tenant you are well advised to find out what the premises currently have planning permission for and whether the existing planning permission will cover your proposed use. We suggest you contact the local planning officer on 01925 443322 or http://www.warrington.gov.uk/planning/
If there is anything particularly unusual about your proposed user please let us know for example will it result in your needing access at unusual times? Will it involve hazardous materials, heavy machinery or noisy activities?
How can a tenant make alterations to the premises?
The Landlord will insist upon being notified of and agreeing in advance to any alterations of the property. If the Tenant is to carry out alterations to the premises then these need to be discussed with a reputable builder and signed off by the Landlord prior to entering into the lease.
Will there be alterations to the premises? If so please give us a rough outline as to what these will be? If the Tenant has appointed a builder, who and what are their contact details?
What is a rent review?
It is very common for there to be a rent review during the term of your lease. Traditionally these have been ‘upwards only’ i.e. the rent either goes up or stays the same. There are two schools of thought on rent reviews; either the rent goes up by inflation or the rent is increased to reflect the perceived market value of the premises. Inflation reviews are much cheaper and more certain but letting agents do not like them, guess why!
Matters to consider in the current economic climate include
(a) if the term of the lease is fairly short is a rent review appropriate at all?
(b) Inflation is running far ahead of market rental values at the moment. This may colour your choice of rent review clause but obviously the economic climate may change.
(c) It is only a matter of time before we see upward and DOWNWARD rent review clauses.
If there is to be a rent review clause please let us know;
(a) when the reviews are to take place
(b) what mechanism will be adopted and, if it is to be a market appraisal, who is to bear the cost of the surveyor?
What are service charges and who pays them?
Is the Tenant expected to pay a contribution towards the maintenance and or provision of services on the premises or the Landlords estate?
THINK:-
(a) what services the Landlord is going to charge for? are they all appropriate for the Tenant’s user?
(b) If there is more than one Tenant on the Landlord’s premises how is the service charge to be split between the Tenants? What if one of the properties is empty?
(c) What is the existing and anticipated level of service charge? Is there any reason why the current level will be different in the future? Will the Landlord expect the tenant to contribute to any expensive work in the future?
Why state any insurance relating to the premises?
It is almost industry standard these days for the Landlord to insure the property (but not the Tenants contents) and for the Tenant to reimburse him. If however the Tenant is intending to carry out expensive building works to the premises this situation can be reversed. At the very least the Tenant will want to know that the building works are covered at every stage.
It is also very common for the Landlord to insure against loss of rent for around 3 years if the premises are destroyed or substantially damaged. The Tenant needs to consider whether he is willing to pay for this extra insurance, particularly so if he is going to take a short lease.
There is often a degree of tension between Tenant and Landlord about what is insured against and at what cost. Tenants will also wish to consider the nature of their own business and how it might affect the landlords insurance. The Tenant will also want to know to the cost of insuring the landlords premises is shared out if the Tenant is only taking a part of the property.
If there are any particular arrangements for insurance what are they? What is the insurance premium presently? Will the insurers terms cover the Tenant’s use? Is there any reason to think that the premium will be increased?
Who pays the legal costs?
Who is to pay the Landlord’s solicitors legal costs? If the Tenant, has any cap been agreed?
There are really two approaches here and lots to look out for. The lease will either be a ‘full repairing lease’ or an ‘internal redecorating lease’.
In either event you will have to look carefully are what it is the tenant is being required to do, if the lease provides that the Tenant will put and keep the premises in tip top condition then the Tenant will have to do just that no matter what state the premises are in when they went into occupation and no matter how short the lease. Equally the lease may provide simply that the premises are kept in no worse condition what at present, fair wear and tear excepted.
You will both need to consider the state of the premises, the length of the lease etc and have to decide whether it is appropriate for the tenant to be wholly responsible for the premises or whether the land lord should be responsible for the structure of the premises, foundations, shared walls roof etc.
Protecting your back regarding the condition of the premises?
Unless the Tenant is willing to take on a full repairing lease of the premises it is essential that some record is made of the condition of the premises when the tenant entered in possession of them. Depending upon the degree of obligation and the age of the property we would recommend a structural survey or a photographic, video and written record of the condition of the premises.
Who is going to carry out the survey? At who’s expense? Is the schedule of condition going to be signed off by both the Landlord and the Tenant?
How does the lease state that the premises will be maintained?
Further details coming soon!
What else do i need to know about?
There is a never ending stream of regulatory requirements imposed by the govt on Landlords and Tenants. At the very least the Landlord should be asked to produce an energy performance certificate, a gas test certificate, a fire safety plan, an asbestos survey of the building. We cannot keep up to date with the individual requirements but refer to you the Warrington Business link website for details.