Commercial Property FAQs
QI am a Tenant of commercial property. My Landlord has given me a Notice to leave the property. Do I have to leave when he says?
A
In ordinary circumstances, Tenants of commercial property have "security of tenure".
In short, this means that the Lease does not end automatically at the end of the contractual term. Instead, the Lease continues indefinitely unless and until either the Landlord or the Tenant takes steps to end it.
If the Landlord requires the Tenant to leave the Property, the Landlord must give the Tenant at least six months' notice in a prescribed form and, in that Notice, rely on one or more of a limited number of grounds to obtain vacant possession.
The Tenant can then apply to a Court for an Order for the grant of a new Tenancy. It is then for the Landlord to satisfy the Court that the ground or grounds on which he intends to rely are valid and the Court will not automatically order the Tenants to leave.
Q:
I am a Landlord of commercial property. I have heard that, unless I do something about it, the Tenant will have rights to renew the Lease at the end of its term, and even to receive compensation.
A
In ordinary circumstances, Tenants of commercial property have "security of tenure".
In short, this amounts to a qualified right to renew the Lease, or to receive compensation if the Landlord successfully opposes renewal.
The amount of the compensation depends on the length of time during which the Tenant has occupied the Property and the rateable value of it.
However, and provided that appropriate steps are taken before documents are completed, it is open to the parties to agree that the Tenant will not acquire these rights. The necessary steps involve the Landlord giving the Tenant notice in a prescribed form and the Tenant making one of two possible forms of Statutory Declaration.
Q
I am interested in taking a Lease of a commercial property. The Landlord’s agents have proposed that the Lease should be on a "full repairing and insurance basis". What does this mean and do I have to accept that?
A
A "full repairing and insuring" basis usually means that :-
a. regardless of the current state of the property, the Tenant has to put and keep the Property in good repair and
b. although the Landlord arranges the insurance of the Property, the Tenant reimburses the Landlord the cost of the insurance premium.
Both of these points (and in particular the repairing obligation) are open to negotiation.
A Tenant should always have a property surveyed including to identify any ways in which the proposed repairing obligation should be limited, for example by reference to a schedule of the property's current condition.
Whether a Tenant does or does not reimburse the cost of insurance of a property is a commercial decision, about which a view must be taken in the light of the amount of the proposed rent payable.
Q
I am a Tenant of commercial premises. I have someone interested in taking the premises. How do I go about this?
A
Most Leases of commercial properties include restrictions on the Tenant's ability to "assign", i.e. transfer the Lease, or to "underlet", i.e. grant a new Lease for a term shorter than that of the Tenant's own Lease.
In these circumstances, it is necessary to obtain the Landlord’s consent to any proposed dealing.
Most Leases enable the Landlord to require the Tenant to pay his legal costs and other fees in connection with his consent to a transfer or underletting. The Lease may also enable the Landlord to impose other conditions in return for the grant of his consent.
Do remember that, if the prospective incoming Tenant proposes to change the use of the Property, or to make alterations to it, it will ordinarily also be necessary to obtain the Landlord's consent not only to the transfer or underletting, but also to the change of use and alterations.
For further information please contact David Thorp, Rachel Phillips or Mary Thompson.