LANDLORD’S CONSIDERATIONS WHEN GRANTING A NEW LEASE

Q: What should a landlord consider when preparing to grant a lease of commercial premises?

A: When preparing to grant a new lease as a landlord, it is essential to negotiate comprehensive Heads of Terms that clearly outline the key elements of the agreement. Here are the critical components to consider:

• Term Length: Specify the duration of the lease.

  
  

• Rent Amount: Establish the rental price for the lease period. Consider rent free incentives as inducements to take the premises, consider how soon the premises can be occupied to cover business rates.

  
  

• Rent Review Provisions: Define the intervals and conditions under which rent may be reviewed and adjusted. Consider increments in line with market rents, retail/consumer prices index, stepped rents and caps and collars.

  
  

• Break Clauses: Include any options for early termination by either party  and consider conditions to a break clause.

  
  

• Security of Tenure: Address the tenant's statutory right to renew the lease upon expiration, consider the nature of the tenant’s business plans your own plans for the premises, consider external factors such as the current and projected rental levels.

  
  

• Guarantors: Carry out your due diligence on the proposed tenant, consider its financial standing and strength of covenant. Identify whether the tenant should provide guarantors or other security.

  
  

• Timelines: Set clear timelines for key milestones in the leasing process.

To facilitate a smooth completion of the lease and minimise potential delays, it is important to gather all necessary statutory property documents, risk assessments, and surveys, including:

• Current Energy Performance Certificate (EPC)

  
  

• Gas Safety and Electrical Certificates

  
  

• Asbestos Survey and Risk Management Plan

  
  

• Fire Risk Assessments

  
  

• Planning Documents and Building Regulations Compliance

  
  

• Buildings Insurance Details

  
  

• Specific Operational Licenses and Permits

By ensuring all these aspects are in order, they can help create a robust leasing framework that protects their interests and fosters a positive landlord-tenant relationship.

To ensure a smooth leasing process and protect your position as landlord, make sure that when agreeing the Heads of Terms you gather all necessary statutory documentation outlined above. It is equally important to seek advice on, and obtain clarification of any legal terminology and the implications of both the Heads of Terms and the final lease.

Let us guide you through the leasing process efficiently and effectively, helping you secure the right protections and avoid unnecessary risks.

Call Harshinder Hundal on 08081 729 322 or email at harshinderh@fgsolicitors.com for advice on your next steps

Harshinder Hundal is a Commercial Real Estate Solicitor in Northampton and advises on Lease Management and Property transactions.

Do not miss our latest updates! Follow us on LinkedIn.  

  Click here to explore our commercial, corporate, global mobility and commercial real estate legal services that could benefit your business.  

  This update is for general guidance only and advice should be taken in relation to a particular set of circumstances.