We would always recommend that before you agree the proposed terms with a Landlord, for your new lease, that you run them past your legal adviser, but here are some pointers when taking your lease as to the terms being used:-
“Tenant” : a person who occupies property, rented from a landlord. Consider whether this should be a company rather than you as an individual. Talk to your accountant.
“FRI” (ie. full repairing and insuring) : means that you are responsible for everything. If it is the whole building you are taking that’s the roof, structure etc (everything). If it’s a ground floor shop of a larger building that’s the internal parts, windows & window frames, doors & door frames, ceilings, electrics etc. You will be charged by the Landlord for a proportionate part of the sums incurred in maintaining the building under a service charge. Therefore talk to a surveyor about the condition and check the condition thoroughly.
“54 Act excluded” : this is the Landlord & Tenant Act 1954 and if the lease is excluded it means you have no right to stay in the property at the end of the term. This is your business so consider amending this.
“Service Charge” : As noted above, it allows the Landlord to recover its costs for maintaining the Building. Consideration should be given to limiting this liability or including a cap on charges.
“Alienation” : this is your ability to sell the lease or underlet. Consider if you would need to leave the premises, however you may need the Landlord’s consent to do this.
“Rent Review” : it is normal to have a rent review everything 3 – 5 years in a lease. Consider carefully if the Landlord is asking for rent to be index linked, particularly in the current climate.
In conclusion consider Heads of Terms carefully before agreeing to proceed and we would recommend running them past your legal adviser. Our team of experienced commercial property solicitors in Hampshire and the Isle of Wight offer you comprehensive advice on risk management, and how to get the most commercial value from your property. Call us on 01329 822 333