One of the largest negotiating points between a landlord and a prospective tenant concerns the duration of the lease commonly referred to as the ‘contractual term’. The commercial property team at Howell Jones has considerable experience with advising both landlords and tenants in this respect and offer a bespoke service to ensure clients are informed of all their available options. This article examines the rental aspects of a commercial lease and the strategies you might employ in negotiations, whether you are a landlord or a tenant.
Commercial Lease Explained
The duration or term of the lease is a crucial aspect of negotiations for all concerned parties. If the tenant is known to be reliable and cooperative, the landlord might prefer a long-term lease with appropriate rent reviews throughout the term. From the tenant’s perspective, and depending on their business needs, they might aim for either a shorter lease or a longer contractual term with a break option for future flexibility.
Both parties may seek to include break or extension clauses in the lease to broaden their options. It is essential to agree on who can trigger these options and the required notice period to ensure they take effect. Careful consideration must be given when drafting the provisions of a break or extension option. At Howell Jones, we have extensive experience in negotiating such terms and advising on their impact on rent reviews, rental payments, or their triggering of premium payments.
Landlord and Tenant Act 1954
Consideration must also be given to the Landlord and Tenant Act 1954 (commonly referred to as ‘the LTA 1954’). Typically, all commercial leases fall under this Act, providing tenants with the right to renew the lease at the end of the term. The lease therefore becomes known as a ‘Protected Lease’ as it benefits from a security of tenure. However, parties can agree to exclude this statutory protection through a process known as ‘contracting out’. Protected lease negotiations can, in certain circumstances, be considered somewhat perilous as it is common that the lease’s terms will impact both parties for a considerable time after the lease’s contractual term has ended.
If you are considering granting or taking a new commercial lease or renewing your current lease, please contact our Surrey solicitors, Howell Jones, on 0800 011 9813 to discuss how we can assist you. Our team of commercial property solicitors in Surrey have the expertise to guide you through the process from start to finish.
