PLANNING AHEAD
Jacksons Law Firm partner and head of commercial property , Erica Turner , looks at some of the expected property trends this year and offers some key advice …
This is typically the time of year when individuals and businesses begin to plan for the year ahead .
The commercial lettings market is particularly buoyant with an increase in new start-up businesses looking to take on premises as individuals change their perspectives and as industrial businesses benefit from the increase in manufacturing required , in part , to curtail the coronavirus
For landlords :
1 . Guarantor / Rent Deposit . Is your current tenant late with rental payments ? If a deposit is held , the terms of the deposit ought to provide that you can withdraw monies to meet outstanding payments . If a new lease is being granted , particularly to a newly formed company , consider taking a rent deposit or requesting a guarantor as additional security against tenant default . If the tenant performs well , the guarantee or deposit could be released after a certain period .
2 . Sublettings / Sharing Occupation Do your leases allow for tenants to sublet ? We ’ re seeing an increase in tenants wishing to have maximum flexibility with their leases with a view to ensuring they are suitable for use in the long term . A tenant may forge a working relationship with another entity and may wish to allow that entity into occupation of part of its premises . Is your tenant able to do this with or without your consent ? If a tenant is wishing to sub-let part of its premises you ought , at the very least , to retain some control in approving any sub-lease .
3 . Dilapidations If you have existing leases coming to an end in the near future , consider instructing a surveyor to prepare a schedule of dilapidations identifying any wants of repair or decoration in the property for which the tenant will be liable . Any existing leases may also allow for you to serve an interim schedule of dilapidations during the lease term with a view to minimising the dilapidations risk and liability at the end of the term . Your tenant can be required , as part of the dilapidations process , to provide up to date electrical and gas certificates and asbestos reports . This can mitigate your costs in providing these documents to any new tenant . infection .
Confidence in the market remains high and it seems likely this confidence will continue throughout 2022 , particularly in industrial or retail park settings .
With this in mind , I ’ ve set out below some top tips for both landlords and tenants to aid property planning for the year ahead :
For tenants :
1 . Works Do you wish to carry out alterations to your property to make it more suitable for your use ? If so , a consent from the landlord may be required . It is often the position that landlords will allow non-structural alterations to be carried out with consent , but structural alterations are prohibited . If you ’ re not looking to carry out alterations at the outset , you may want the ability to do so during the term to ensure the property remains suitable for your needs therefore you should try to ensure that the lease provides for this within the term .
2 . Repair Is your repairing obligation suitable ? The standard position in leases is that they contain a “ full ” repairing obligation meaning that , at the end of the term , the property needs to be handed back to the landlord in a state of repair and condition where the landlord can immediately re-let the property without expending any money . This can be onerous . Consider having your repairing obligation limited to a schedule of condition . The effect of a schedule of condition is to limit your repairing obligation to the schedule meaning that you are not obliged to return the property in any better state of repair than evidenced by the schedule .
3 . Break A break clause would give you the ability of terminating the lease earlier than the contractual expiry date . You should consider whether the landlord requires any pre-conditions to the break to be fulfilled before the break can be effective – e . g . paying the rent up-to-date . Often , pre-conditions can be onerous and could prevent you from exercising the break so advice is best sought before agreeing to or exercising a break .
Erica Turner Partner and head of commercial property , Jacksons Law Firm
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