With the current economic climate, many tenants who are looking to renew their lease are also looking for revised terms in order to put themselves in a stronger financial position moving forward.
Whilst most lease renewals are governed by the Landlord and Tenant Act 1954, there can still be room for negotiation if both parties are agreeable.
Those tenants who are protected by the Landlord and Tenant Act 1954 have an automatic right to renew their lease and should therefore serve a statutory notice on their landlord stating their intention to do so. Alternatively, the landlord can also serve notice on the tenant when the term of the lease is coming to an end. Irrespective of who serves the notice, the tenant should be aware of the time limits placed upon them in agreeing the terms of the new lease and to ensure that they do not lose their right to renew their lease.
Once the notice has been served, the parties can then begin the negotiation process of the new terms of the lease. If a tenant is a long-term tenant and has been un-problematic throughout their tenancy, they may be in a strong position to re-negotiate more favourable terms. This could include a rent free period or rent reduction, a more frequent break clause or even a revised lease term. Some tenants may also want to consider trying to negotiate a COVID clause, whereby rent could be reduced or suspended during a further government lockdown. The COVID-19 pandemic has impacted all business and few landlords will want to have a vacant property during the current market conditions, placing tenants in a stronger position than usual. We have seen some household names be successful in requesting rent reductions or suspensions in return for an increased lease term showing that if landlords are willing to compromise in the short term, they could have the security of a tenant in their property for longer than anticipated.
If you are looking to renew or renegotiate your commercial lease, its important to understand what your options are and your legal position. Contact a member of our commercial property team today for a no obligation discussion on 0845 287 0939 or submit your enquiry online