Your business tenant is not paying his rent – how can you get your money? What is the problem? Our landlord clients tell us that many of their commercial tenants are not currently paying the rents due under their leases – in most cases, their...
It can be a daunting experience for clients taking on a lease of a premises – even if a client has entered into a lease before. There be may be complex terms such as “FRI” which a tenant is faced with and has no idea what this means.
The Nowell Meller Commercial Property team act for a variety of client tenants – from taking on their very first retail unit through to expanding businesses renting thousands of square feet. We act for a wide range of clients from retail, heath, food, education through to manufacturing, entertainment, sport etc.
Here to help
We don’t believe there is such a thing as a silly question. Landlord and Tenant law can be complex so if you are considering rental premises, then please feel free to call our dedicated team at our Stoke on Trent office on 01782 813315 and at our Stafford office on 01785 252377.
Taking advice before terms agreed
We always tell our clients to contact us before they finalise Heads of Terms. The premises will have been advertised on terms the landlord would like to agree and a potential tenant may not fully understand what those terms mean. We are happy to provide tenant clients with advice so they can negotiate directly with the agents, or alternatively provide further supporting by negotiating directly.
Heads of Terms are extremely important because once agreed, the landlord Solicitor will prepare the lease and any supporting documentation based on those terms. So, if for example, a tenant has agreed to take on an FRI lease, then the lease will state that the tenant is fully responsible for repairing and maintaining the premises. Usually the lease will go further to state the premises is to be kept in good and substantial repair. This is a high level of repairing liability and a tenant may not understand the financial implications of agreeing to this. There are ways of negotiating a limitation to the repairing obligations which is why speaking with the Nowell Meller Commercial Property team is so important.
Useful tips for tenants to consider
- Heads of Terms are important – take advice before finalising.
- FRI – means Fully Repairing and Insuring. It can be a high level of repairing responsibility and this should be limited by a Schedule of Condition which shows the actual condition of the premises.
- Rent – for tenants who are not VAT registered, find out if the landlord has elected to waive the VAT exemption because if this is the case, then VAT will be charged in addition to the rent.
- Rent Deposit – if the landlord asks for a rent deposit then seek advice. This is a sum of money the landlord retains separately until the end of the term.
- Personal Guarantee – if the tenant is a limited company and the landlord is requesting for directors to provide personal guarantees then take legal advice before agreeing to this.
- Authorised Use – double check the premises has the correct authorised use. If the premises has retail use then it cannot be used for, say, education purposes without a change of use application.
- Break Clause – it may be worthwhile considering taking a longer lease term if the landlord will agree to a break clause. So, for example, instead of offering a 3 year term – it might be worth considering a 5 year term with a break at year 3 if all does not go to plan.
- Inside the Act – if a tenant sees the words “excluded from the Landlord & Tenant Act 1954” they should take advice. This essentially leaves a tenant with no right to renew at the end of the lease term.
- Works – consider whether any works need to be undertaken and agree at the outset.
- Subletting – if a tenant is taking on a larger space and there is the ability to sublet part, then it is important to agree this at the beginning because the majority of lease provisions do not allow subletting of just part of a building.
Assignment of an existing lease
We act for tenants who wish to assign/transfer their remaining lease interest and we provide advice on the procedure to be followed to obtain landlord consent. Contact Nowell Meller Commercial Property team for advice on how to agree terms with the proposed incoming tenant as well as collating all the necessary information for the landlord to consider the request.
Surrender of an existing lease
Tenants may find themselves in a difficult position where they can simply no longer continue and may wish to discuss the basis on which the landlord would consider a surrender. A landlord is not obliged to grant a surrender, but the Nowell Meller team will always be on hand to negotiate the best possible outcome.
If you have any questions or you would like to discuss our services in more detail, then please do not hesitate to call our Commercial Property team at our Stafford office on 01785 252377 or our Stoke on Trent office on 01782 813315