1. Ask for a rent free period.
Look at the state of the property you are taking. Will you need to fit it out or carry out some refurbishment? During this time, you will not be able to gain an income from the property. Asking for a rent free period to offset any timescales for fitting out/refurbishment works will give you some breathing space.
2. Think carefully about who is taking the Lease.
Remember that whoever is taking on the lease will be liable for the obligations in the lease. As an individual, this means that you would be personally liable. If you fall behind in your rent, the landlord (in addition to the remedies that it has under the lease) may also be able to go after your personal assets to recover money that is owed.
Talk to a professional advisor about the possibility of taking the lease in a separate limited company. However bear in mind that if the Landlord agrees to this, he may require additional security in the form of a rent deposit and/or personal guarantees. Avoid giving personal guarantees if you can.
3. Ask for a break clause.
A break clause allows you (and/or the landlord) to end the lease early by giving notice to the other party. Negotiating a break clause will allow you to downsize or relocate to a larger unit if needs be without having the worry of being tied into the lease for the full term.
4. Carefully consider your repairing obligation.
Try to limit your repairing obligation so that you do not have to put the property into a better condition than when you took it on. If agreed, the state of the property will be recorded in a schedule of condition (a written and/or photographic schedule of the state of the property) which will be attached to the lease.
5. Be aware of costs involved.
In additional to rent, legal fees, rent deposits and any Land Registry fees that will need to be paid when the lease is completed,, stamp duty land tax (SDLT) may also be payable on the rent. SDLT is based upon the amount of rent and the length of the term. Ask you legal advisor for a rough calculation prior to agreeing terms.
If you would like to discuss your proposed or current commercial property lease, then please contact Lily Meyer of Morrisons Solicitors Commercial Property Team in Wimbledon on 020 8614 4590 or by e-mail on [email protected].
Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position.