When a lease is being granted, there is a lot more to think about than just the lease document itself. Whether you are the landlord or the tenant, it is always advisable to instruct solicitors to act for you so that you are fully aware of the risks and your obligations. If you are the tenant, it is important for a solicitor to check the landlord’s title to the property and deal with any issues prior to completion of the lease. If these are not dealt with they can have serious consequences and put your lease at risk. Whilst this article will give an overview of the practical issues that may arise, it is important for a solicitor to negotiate and advise you on the particular terms of your lease.

Heads of terms

the landlord and tenant must agree the heads of terms first, no matter how small the lease is, to avoid any unpleasant surprises, arguments and delays later down the line. It is sensible to get an agent to advise you on the heads of terms: they will be able to negotiate better terms for you and guide you on the proper level of market rent for your property. Heads of terms will be specific to the lease and property but should include items such as the annual rent, term length, rent review dates and break date.  They could also deal with payment of utilities, deposit, the requirements of the landlord for repair at the end of your term, and so on.

Title review

your solicitor will review the landlord’s title to the property and raise any enquiries necessary. They will check that the correct party is granting the lease, and whether there are any issues registered on the title that you should be aware of, such as a right of way or restrictive covenants. Your solicitor will also check that there are no existing leases of the same property. If the landlord has a charge registered on the property, the lender’s consent to the lease will be required and your solicitor will ensure this is provided before or on completion.

Stamp Duty Land Tax

SDLT will be payable on leases over a certain threshold. Your solicitor will calculate the correct amount payable. If you are liable for SDLT, your solicitor will submit an SDLT return to HMRC and will submit your payment. If your lease is for 7 years or more, an SDLT return must be submitted even if there is nothing to pay. Your solicitor will make sure that this is completed within HMRC’s deadline of 14 days. There are penalty fees to pay if this is not done in time.

Land Registry application

if your lease is for 7 years or more, it must be registered at the Land Registry. This is compulsory and your lease will not be legally valid if it isn’t registered within 2 months. In order to be registered, the lease will need to have a Land Registry-compliant plan. Your solicitor will make sure the landlord provides one. If your lease is for less than 7 years, it can still be noted at the Land Registry, but it won’t get its own title number. This will mean that if the landlord sells its interest on or grants a charge to a lender while you are a tenant at the property, the new owner or lender will know about your lease and your interest will be protected.

Here to help

If you have any more questions or would like further information on how we can help, you can contact our Commercial Property Team on 0161 941 4000 or email The Commercial Property Team.