Commercial property leases are usually very detailed, lengthy and complex documents; the first draft of which is always produced by the landlord. This means that the lease will inevitably be biased in the landlord’s favour and often, considerable amends are required in order to redress that balance.

It is often the case, however, that unless tenants have experience of dealing with leases, they may not recognise where that balance needs to be redressed and are unlikely to spot the many clauses that, if not amended or deleted, could cause problems for them once the lease is completed.

For example, did you know that:

  • A tenant should never agree to “put” a property into a good state of repair (rather than simply “keep” a property in a good state of repair)?

  • It is important to check that the repair obligations in the lease are clear – if the lease is a lease of part of a building only, are there adequate obligations on the landlord to repair the structure and exterior? Is the tenant’s obligation to repair the interior properly defined?

  • Commercial tenants automatically have a right to remain in their property beyond the expiry of the term of the lease and have the right to request a new lease from their landlord – does the lease reflect this?

  • If the tenant is able to assign their lease, they are still likely to have to guarantee payment of the rent and the tenant’s other obligations under the lease until the new tenant assigns the lease on in turn, so assignment may not actually be beneficial?

  • The more conditions there are to any tenant break option the easier it is for a landlord to challenge the validity of the break. Any break condition requiring the tenant to give “vacant possession” of the property needs to be amended as this could prejudice the tenant?

In addition to the above, it is very important to review the landlord’s title deeds to the property to check whether any third party consents to the lease are required, for example from the landlord’s lender or a Superior Landlord – tenants can risk eviction from a property without required consents.

Lease Review Services

In order to keep matters as straightforward as possible for tenants and to assist with untangling the complexities of a lease, I offer two clear options in terms of advising tenants on commercial leases:

  1. Lease review – £750+VAT

This is the most straightforward option and is for tenants who want to commit to a fixed fee only and would like a quick turnaround. This option includes:

  • Reviewing the draft lease prepared by the landlord and reporting to the tenant on the same by way of a face-to-face/zoom meeting (usually around 2 hours).

  • During the meeting: (a) running through all the terms of the lease with the tenant to check that the tenant understands these and is fully aware of the implications of each clause and the extent of their obligations and (b) advising the tenant of any clauses that cause concern or that ideally should be amended.

  • Reviewing the landlord’s title deeds to check: (a) whether any third party consents are required to the lease (b) that there are no existing leases of the same property (c) to check for any problems that would prevent registration of the lease at the Land Registry (if applicable) and (d) to check whether there are any burdens or obligations that might affect the property (if title deeds cannot be obtained from the landlord’s solicitors we can obtain these at a cost of £3+VAT)

Any negotiation on the lease would be for the tenant to undertake directly with the landlord (but this can of course be agreed with me for an additional fee).

  1. Full service lease review and negotiation – approx. £1500+VAT+third party expenses*

As an alternative to the first option, the second option is essentially a “full service package,” which involves review of the lease and reporting to the tenant on the same as detailed in option 1, however, this option also includes the following:

  • All negotiations with the landlord’s solicitor.

  • Requesting and reviewing replies to Commercial Property Standard Enquiries (CPSEs).

  • Instructing and reviewing commercial property searches.

  • Raising enquiries on the results of the title investigation, CPSEs and searches.

  • Reporting to the tenant on the title investigation, CPSEs, searches and replies to enquiries.

  • Dealing with completion of the lease.

  • Instructing a pre-completion search (if applicable).

  • Preparing and submitting a Stamp Duty Land Tax return to HMRC (if applicable).

  • Registration of the lease at the Land Registry (if applicable).

*Third party expenses would consist mainly of commercial property searches (approx. £400-£800 depending on which are required which can be discussed), the cost of any Stamp Duty Land Tax (SDLT) and any Land Registry fee for registration of the Lease. Whether any SDLT is payable is dependant on the level of annual rent and the length of the Lease. All leases over seven years in length are required to be registered at the Land Registry.

In each case with option 1 and option 2, if third party consents are required to the lease, this is also something that I can assist with for an additional fee.

To discuss the review and/or negotiation of a commercial lease, please contact myself or one of Farleys commercial property team on 0845 287 0939 or contact me by email.