Lease Consultancy covers a wide range of potentially far reaching issues all governed by a tenants lease that both parties will need to resolve and formally document.
With flexibility becoming increasingly important for tenants the growing trend for shorter leases has been accelerated further by COVID-19. As a consequence the frequency of ‘lease events’ are increasing which provide opportunities for both parties to add value.
We can act for both landlord and tenant clients in providing strategic advice on all these matters which is all underpinned by market intelligence held by us and the ability to negotiate the best terms for our clients.
The main lease events are summarised below:
A rent review mechanism is a way of increasing the rent for the landlord. These are generally reviewed on an upwards only basis i.e. at the higher of the current rent or the prevailing market rent. Rent reviews generally occur every 5 years however shorter 3 year or even annual reviews can also be agreed.
Usually within the last 6-18 months of the current lease and dependent on 54 Act provisions this provides both parties with the opportunity to agree a new lease.
Can be negotiated and agreed at any time during the current lease where both parties are happy to document an extended lease commitment. This also provides an opportunity to modernise and change any onerous provisions agreed previously.
This usually provides the tenant with an opportunity to end their lease however the triggering of the notice to action is usually time critical and may be conditional on other matters. Mutual or landlord only break options are less common but have the same affect. The pushing back or removal of break options can be used in order to negotiate enhanced terms for either party.
An agreement with the landlord that enables the tenant to surrender the lease and walk away from the building. This generally involves a surrender premium paid by the tenant (Reverse Premium if landlord pays).
Where the tenant sub leases the whole (or part) of the demise to a 3rd party (sub-tenant) for part of the unexpired lease term. This needs the approval of the landlord and will be subject to strict alienation provisions governed in the lease which usually restricts the tenant to a limited number of sub-leases.
Where the tenant (assignor) assigns the lease and all responsibilities to a 3rd party tenant (assignee) for the whole of the demised accommodation. This needs the approval of the landlord and will be subject to strict alienation provisions governed in the lease.
The above ‘lease events’ are not exhaustive – along with the above we can provide advice in order to agree and document other agreements such as Wayleaves / Licence for Alterations / Tenancies at Will etc.