Call +44(0)161 941 4000
Call +44(0)161 941 4000
We can assist you with all aspects of taking a lease of a property, whether you are an experienced tenant trading from hundreds of units, or you are embarking on a new business venture for the first time. We deal with many different types of properties for tenants, including shops, offices, manufacturing sites, industrial units and restaurants/cafes.
Our expert commercial property solicitors will give you clear, concise and practical advice tailored to suit you.
Ranked as a Tier 1 Department by the Legal 500 we are experts in negotiating lease documents to make sure that they protect you and your business so that you can focus on making your move a successful one.
Leasing a property is a serious investment and involves you taking on substantial obligations and liabilities, often for a very long time. It is vital that these obligations and liabilities are explained to you in detail so that you understand what you will be signing up for. We take the stress away from what can seem like a confusing process and ensure that you are kept fully informed at every stage of the transaction.
Our areas of expertise include the following:
We have a wide range of experience in assisting tenants with commercial leases and related matters of all sizes.
There are various documents that we will request from the landlord’s solicitor, in addition to a draft lease. Your solicitor will pass these on to you for you to look through. It is important that you keep copies of the documents as you may need them in the future.
Before instructing a solicitor and signing a lease, we would highly recommend that you instruct a property agent (or surveyor) to agree the commercial terms and conditions of the lease on your behalf (known as heads of terms). The surveyor will ensure that the terms match your requirements and that you fully understand them. In our experience, the early days of negotiation are a key time to resolve important issues and differences and will lead to a smoother, more cost-efficient transaction.
The terms that need to be considered include the following:-
It is easy to get caught up in the pace of negotiations, especially if there is pressure to “close the deal” quickly, but it is important that you take the time to understand all of the terms, the obligations imposed and the financial implications of these before you agree to anything. Important points for a lease, such as those listed above, should be addressed at the earliest opportunity. Before final heads of terms are agreed, you may wish to check these with your solicitor to ensure that your specific requirements have been taken into account and that there are no points where ambiguity might arise when drafting begins.
Taking on a lease is an important decision and you must ensure that you are fully informed about the risks. If you change your mind about a property, or your business does not do as well as you expected, then you will not be able to just leave the property and cancel the lease without the landlord either agreeing that you can be released from your obligations, or you finding someone to transfer the lease to, who is acceptable to the landlord. Depending on what the lease says, you may also be liable to repair the property and to put it in a better state than it was when you took on the lease.
We sometimes hear people tell us that they don’t want to spend money on using a solicitor before they enter into a lease. There are situations where you will probably have to use a solicitor so that you can complete the transaction eg if the lease incurs a Stamp Duty Land Tax liability (see below) or it has to be registered at the Land Registry. You could in other circumstances just sign the lease. In our view, however, this would be a very short-sighted approach to take. You are very likely to be signing up to take on extensive liabilities and storing up problems for the future.
We provide a service which is tailored to the advice you need and the budget you have to spend: whether you would like a report to tell you the main terms of the lease and advise you of the risks involved in the transaction or you need a detailed review and negotiation of a complicated suite of documents involving the completion of the lease being conditional on the obtaining of planning permission and construction of the property.
This will depend on the term of the lease and the annual rent you will be paying. These figures are used to calculate the ‘net present value’ of the lease. The amount of tax is then calculated by reference to this value. The longer the lease and the higher the rent, the more likely it is you will have to pay SDLT. Your solicitor will calculate and let you know the SDLT due at the outset of your matter.
If the landlord charges VAT on the rent, the VAT inclusive figure will be used in the SDLT calculation. Please see the two examples below:
The annual rent used for the calculation is £54,000 (£45,000 plus VAT). Rent reviews which happen after 5 years are not included in the SDLT calculation.
The SDLT due, based on the current rules (June 2020), is £2,990.
We will prepare the SDLT return, which has to be sent to HM Revenue and Customs, together with any SDLT payment due within 14 days of completion of the lease If you miss this deadline, HMRC may charge a penalty.
Firstly, we will check that your lease includes a right to assign the lease. This is allowed in most leases, provided that you get the landlord’s consent. You will need to approach the landlord to check they are happy for you to assign. The landlord is likely to require some references from the new tenant.
The relevant clause in your lease may also allow the landlord to request a rent deposit from the new tenant or a guarantor. You may also need to enter into what’s called an ‘authorised guarantee agreement’, to guarantee the new tenant’s obligations.
The landlord’s consent is normally given in a licence to assign, and they will probably want you to cover their legal fees (usually between £750 to £1,250 plus VAT). The assignment of the lease will be documented in a deed of assignment or a transfer deed, depending on whether or not the lease is registered at the Land Registry.
You may find someone who wants to take over your lease (see question about assignments above).
Alternatively, the landlord may agree for you to surrender your lease early. This is usually documented as a deed of surrender. The landlord may want you to pay a premium for agreeing to terminate early. You will have to pay this on completion of the deed of surrender. The landlord will have no obligation to allow you to surrender the lease.
Most leases contain an obligation for the tenant to reinstate the property when the lease ends, meaning that they must remove any alterations/ additions they have made to the property during their lease. However, sometimes the landlord may agree for you to leave these alterations if they benefit the property. You will also need to make sure the property is left in the state of repair and condition required by the repairing obligation in the lease.
Depending on the value of the property, the landlord may serve a schedule of dilapidations on you before/ after the lease ends. This will record which items they want you to reinstate, and any items of disrepair you have to make good. Sometimes the landlord will ask for a sum ‘in lieu’ of carrying out these repairs and the reinstatement. You will need to factor these costs in when considering the termination of your lease.
Home-grown or recruited from national, regional or City firms. Our specialists are experts in their fields and respected by their peers.
Joanne is a Partner and Head of our Commercial Property department
Mark is a Partner in our Commercial Property department
Andrew is a Partner in our Commercial Property department
Ian is a Legal Director in our Commercial Property department
Sarah is a Senior Associate in our Commercial Property department
Joanne is a Senior Associate within our Commercial Property department
James is a Senior Associate in our Commercial Property department
Cindy is an Associate in our Commercial Property department
Charlotte is an Associate in our Commercial Property department
Emily is an Associate in our Commercial Property department.
Sarah is an Associate in our Commercial Property department
Sidrah is an Associate in the Commercial Property department
Hannah is a Trainee Solicitor within our Commercial Property department
Keep up-to-date with the latest legal news and our expert opinion.