The majority of businesses need premises to operate from, whether they be for offices, workshops, factories or storage facilities.
PLEASE NOTE: FOR CORONAVIRUS SPECIFIC GUIDANCE WE HAVE PRODUCED THE FOLLOWING BLOGS IN REGARDS TO COMMERCIAL LEASES/LANDLORD & TENANT ISSUES:
The Coronavirus Bill – what it means for landlords and tenants
Coronavirus – Do my obligations under a commercial lease still stand?
While some businesses own the premises they operate from, most occupy under a lease paying a market rent. But, there is more to a commercial lease than the payment of rent and the answers to the following commonly asked questions will give potential business tenants some useful guidance:-
1. Once I have signed the lease can I get out of it if my business suffers a downturn?
Leases are generally granted for a fixed period of years known as a term. The lease term can only be ended early by the tenant if, prior to entering the lease the landlord has agreed that the tenant has an option to do so, or, the landlord later agrees to release the tenant from the lease before the term has expired. If neither of these situations arise, and you cannot find an acceptable replacement tenant for the premises, you may well remain bound to pay the rent and comply with all other obligations until the end of the lease term, even if you have vacated the premises.
2. I know there will be rent to pay, but are there any other costs I may be responsible for under the lease?
If you are renting part of the landlord’s building such as an office block, you may also have a responsibility to contribute to the upkeep and maintenance of common parts of the whole building such as the roof and structural walls, or other things that are used in common with other occupiers of the landlord’s property, such as lifts or a reception area. This is often referred to as service charge. The tenant will also be responsible for the payment of the insurance premium for the premises to cover damage to the premises and also the loss of rent the landlord may suffer if the premises become unusable due to such damage.
There can be a cost if you want to transfer the lease, or sub-let part of the property to someone else, as you will usually need the landlord’s written permission, and the landlord can normally claim the cost of considering whether to agree to the transaction and also drafting and agreeing the form of the written permission. Finally, you will usually be responsible for the business rates, utilities and any other outgoings in relation to the premises.
3. If I find that there are repairs required to the premies, am I right to think the landlord will sort them out?
Most commercial landlords not only seek to avoid any responsibility to carry out repairs to the premises, but will actually seek to put the responsibility for putting the property into repair on the tenant’s shoulders. A tenant who agrees to a full repairing obligation can find himself with a repairing bill running into tens of thousands of pounds when the lease ends, despite the fact that the disrepair pre-dated the lease itself. A well advised tenant will try to limit his repairing responsibility to keeping it in no worse state than it was at the date of the lease. For this reason, it is highly recommended that an ingoing tenant obtains a survey to check and record the condition of the premises before they enter into a lease.
4. What happens if, after I have taken the lease, I discover there are problems relating to the premises that impact on my business?
The principle of “buyer beware” relates to a tenant taking a lease in the same way that it does to a purchaser buying a property, meaning that a tenant takes a property “warts and all” and they must satisfy themselves that it is suitable both physically and legally for the use they intend. The research into the property carried out by a good lawyer will reveal many things about the property, including whether the landlord actually has the power to grant the lease, any adverse rights that may affect it as well as any rights that benefit the property such as rights of way. Lawyers can carry out a range of enquiries and searches to discover such things as planning permissions affecting the land, whether the property is connected to the public highway, whether there is any risk that the premises may be on contaminated land, whether there is a risk of subsidence due to historic mining in the area, whether the property is connected to mains utilities and a host of other information.
It is common for tenants who have not been represented by solicitors to enter a lease without finding out any of this information. If a problem rears its head in such a case, say for instance the property does not have planning permission to use it for the tenant’s business, he will have no comeback against the landlord and the tenant will have to continue paying the rent despite the fact he may have a useless asset.
5. I’ve heard that a landlord can change the locks of my business premises if I am late paying the rent, is this true?
In short, yes. The powers of a commercial landlord to deal with non-payment of rent are far-reaching. Forfeiture is the procedure by which a landlord can terminate a lease and virtually all commercial leases will have a clause allowing the landlord to terminate the lease if the rent is unpaid for a specified number of days, usually somewhere between 14 -28. Unlike their residential brethren, commercial landlords do not need a court order to retake possession of leased property if their right to forfeit the lease has arisen because of late payment of rent. Landlords also have the right to send bailiffs in to seize the tenant’s goods and sell them if the rent is unpaid, but legislation will soon come into force to restrict this right.
The above answers cover some basic issues relating to commercial leases, but in reality only scratch the surface of what is a complicated topic. If you have any queries relating to commercial leases please comment on this article and I will try and answer them. I will also be posting further blogs on different aspects of commercial leases and commercial property in general and welcome and comments and contributions you may have.
I need information on leasing our motel with a house to a non priohit group. Does that make a difference. Can lease payments be every 6 months?
I have paid money for comercial lease to joint landlord but one landlord confirm he received money but his partner gave me lease with totally different terms and conditions which that wasn’t our agree after i didn’t signed lease because of term and conditions he denied he received his share what shall I do
My new commercial lease of a cafe premises has been an utter disaster since the starting date of 01 July.
I have ceased any trading as if 10 days ago.
I have tried to agree a surrender of lease on reasonable terms but without the Landlord giving me any garruntees about my £1000 deposit I had no starting point.
I am aiming for a claim of Misrepresentation to start as soon as possible.
I have kept the Landlord informed at all times of my intentions and that I am slowly clearing the cafe out of my belongings , I live 1 hrs drive from the Cafe and am due to travel there tomorrow to allow access to the Coffee Co to take the machine away.
On day 3 I was aware that the cafe had been accessed by someone at night over the past 2 consecutive nights, I changed the locks.
My cafe manager visited the Cafe today at 5om to discover the locks have been changed by the Landlord.
He was demanding the keys from me earlier this week and I said absolutely not.
I told him I was moving out of the premises .
My rent was due in the 1st of August , but I haven’t paid it.
Considering this is 13 August , can you advise me what I need to do now.
Is this criminal entry and a matter for the Police or is this a civil matter.
When I return to the cafe tomorrow can I get the locks changed again or should I call a local solicitor ?
Pls help me here.
Phil M
Devon.
Hi. My landlord issued a letter to vacate our business premises nearly 2 years ago at the end of a 4 year lease. We discussed renewal on same terms but did not receive a new lease. We were always invoiced for a quarter in advance. However we have not received any invoices despite paying the first 2 quarters We therefore now owe a further 6 quarters but still no demands for payments.
If they suddenly now make a demand am I liable without a lease?
Thanks
hi I’m currently renting a one bed flat an due to a unnoticed leak on the ubend at the back of the toilet as it was all boxed in tiles in…my bathroom floor all lifted,and ovcourse the roof down bellow in the car port plaster bord all fell down under stress of the unnoticed leak! Witch I’m sure down to building regs should of been fire resistant plaster bord as it was a car port??This was on a saterday morning an no matter how hard I tryed I could not get threw to the letting agency till Monday morning as they do not work weekends. Were approaching September 2020 I 1st reported this September 2019 unfortunately there is still a large hole in the carport roof directly under the bathroom/ kitchen floor and as it sits there an sags under the strain of not being attended to and repaird I fear the roof more so coming down and doing damage to my car.
Hello, Can a tenant put a business up for sale, within the last 6 months of tenancy.
Also, can he continue, as he has not applied. (Now less than 6 months) to renew.
This is now 10 years in 01/21. There is an option on the lease for another 10 years. I am covered by the 1954 act.
If you can help me , let me know. Kind Regards, David
My cafe roof has fell threw and damaged all my equiptment. I’ve told the landlords about the roof leaking for over a year and they have done nothing. Now this has happened they have still yet to repair all the celling upstairs and no one has inspected the building to make sure it’s safe for me to be in after the amount of water damage. I paid my rent in July. Now he has admitted liability my insurance are investigating my claim as there is a possibility he could void it so I’m still closed with no money. I am refusing to pay this month’s rent and they are now threatening to take things further. Help me please xx
Hi – I rent a commercial property and am wondering if the landlord has the right to enter my property without notice to check alarms, fire safety equipment etc. I am aware I need to allow then into the property to make these checks but had understood they needed to notify me and get my permission. I would be very grateful if you could let me know. This has happened on a number of occasions and not in emergency situations. Thank you.
I’m renting a unit from private landlord we are due to sign lease but landlord says iv to pay half for the lease to his lawyer,us this right ?
Can the lessor have the place rented if I already fully paid the balance and vacated the place but not yet process the transfer of address in the City Hall?