Lease events include rent reviews, break clauses and lease renewals and are a critical time for any landlord and tenant. The outcome of any lease event sets a precedence, not only for future events and the performance of the asset, but also the performance of comparable assets in the region. This is important as it is those assets that will in turn provide market evidence to justify the outcome of the next event of your lease.
Lease Renewals and Rent Reviews
The first step with any lease event is to understand the terms of the agreement in place, and the provisions and mechanisms for how a matter should be settled.
In a typical lease agreement, the mechanism for calculating a rent review will be explicitly stated within the agreement, whereas for a lease renewal the process will largely be governed by the provisions of the Landlord & Tenant Act 1954 and whether it applies to the agreement.
But, as a tenant how can you know that the terms for renewal or rent review being proposed by your Landlord are in line with the lease provisions and market conditions?
As a landlord how can you be sure you are proposing appropriate terms and not missing out on an opportunity to strengthen the performance of your asset?
Commercial property ownership and occupation is not always straightforward, there are numerous factors to consider. However, in my experience, all too often one or both parties decide not to obtain their own independent advice which leads to problems further down the line.
At RHCS my key focus is to provide value to my clients at every stage of my involvement. If my input allows a client to feel comfortable in proceeding with negotiations themselves, I see that as a job well-done.
If you simply want to gain a greater understanding of the facts of your property and the current market, then check out the ‘Strategic Reviews’ section for how I can help you.
Implementing a break clause is arguably one of the more contentious elements of commercial property ownership and occupation. Even the simplest of break clauses can provide a tenant with a difficult task when it comes to ensuring they have complied with the terms of the break clause and the covenants of the lease to successfully break the agreement. Failure to do so, no matter how simple the breach, will often result in the break option being invalidated and the tenant being forced to continue with their occupation of the property.
These situations are complicated further by the fact that a Landlord does not have to communicate with a tenant during the notice period. Subsequently, it is not until after the break date has passed that a tenant who has not complied with covenants fully would find out that their break notice is invalid. By this time, a tenant will have often committed to another property elsewhere.
Be warned – break clauses should be treated very carefully.
It’s imperative that you obtain the relevant advice to ensure you’re doing things by the book – far better to be aware of your obligations ahead of time and implement them fully than to think you have done so only to be told otherwise when it’s too late.
Selling a break clause
Negotiating a break clause in to your lease agreement can be a savvy move, but what if you find yourself in a position where you’re settled at your property and have no intention of exercising the option – there’s nothing for you to do, right? WRONG!
The removal of your break clause may hold a value to the landlord as, depending on the timing, it can improve the investment value of their asset.
To learn more about this, or to discuss any other matters relating to lease events, please get in touch with me.
As with all my services, RHCS’ fees are substantially lower than my competitors – a professional service with expert knowledge bespoke to your brief, for a fraction of the cost!
- Expert on all commercial property matters
- Personal approach to a professional service
- Affordable fees, less than half the typical rate
- Experience at well-established firms in multiple locations and sectors
- Operating across Midlands and Yorkshire property markets