Are You Starting Out in Business?
Thinking of taking a business tenancy? Here, Ian Powell, commercial director at BTMK solicitors reveals a few things to be aware of.
How long should a lease take? Is there any way I can end the lease early?
Circumstances can easily change for any business, so often a shorter lease is better. The problem with a lease that’s too long is that, even if you sell or ‘assign’ your lease, you remain responsible for the rent, and other tenant obligations, for the entire term. This means that if the person you assign the lease to, does not pay the rent or does not maintain or decorate the property, the Landlord can still ask you to pay the rent money or do the necessary works.
If you have no option but to take a longer lease you should try to include a ‘break clause’. This potentially allows you to bring the lease to an end early.
If there is a break clause in the lease, is there anything I have to do before I can end the lease early?
Yes. Usually you will have to give notice to the Landlord, this is usually between 3-6 months. You will also have to ensure that the rent is up to date on the break date, and that you don’t leave any possessions behind when you leave.
How do I know that the rent I am being asked to pay is the ‘market rent’?
The best way to check this is to get advice from a surveyor or valuer. This could form part of a survey which I also recommend when taking a lease because it provides a useful overview of the property you are thinking of leasing.
What repairs to the property will I have to do?
If the length or term of the lease is less than 10 years it is, in my opinion, unreasonable to ask you to do anything other than to keep the property in ‘no worse condition’ than it was in at the date you took the lease. Evidence of the condition of the property at the start of the lease is very useful and this is another reason why I recommend a survey before you take on the property. The evidence usually takes the form of a Schedule of Condition, or a Photographic Schedule which will be attached to the lease.
What are the new rules on Energy Performance Certificates and what do they mean?
Since the 1st April 2018 a Landlord cannot let a property if it has an energy rating of F or worse. You need to ensure that the energy rating is E or better which will also have an impact when it comes to things like utility bills.
What will I be asked to contribute towards, in terms of repairs and maintenance?
Usually a tenant is required to contribute a ‘fair and reasonable proportion’ of the Landlord’s costs in repairing and decorating the building and any common areas.
If the lease term is short and the building is old I think it’s better for a tenant to fix the maintenance contribution per year or to cap it at an agreed yearly figure. This means that you know how much you are likely to pay in any 12 month period.
Will I need planning permission for my intended use?
We can check with the Council at the outset to avoid possible wasted costs and long delays. For example, someone wanting to open a gym or a physiotherapy practice in a retail area will almost certainly require planning permission for change of use.
With many years of commercial lease experience, Ian will guide and assist you through the process. You can contact him on 01702 238511 or email [email protected].
About the Author
With over 30 years experience as a commercial lawyer, Ian oversees the Commercial Department at Madison House. His legal knowledge and expertise encompasses all aspects of corporate and commercial law, with a particular emphasis on commercial property transactions and business sales and acquisitions. Ian is renowned for his meticulous attention to detail regardless of whether the matter is the sale of a large pharmaceutical company, or the purchase of a local fish and chip shop.
