|November 15, 2020||No Comments|
The current uncertainty caused by the outbreak of coronavirus has put commercial leases in the spotlight. Here, Maunder Taylor, who provide business lease renewals advice for customers in Barnet, Potters Bar and many other North London locations, look at why it’s essential that both landlords and tenants are aware of their current legal position.
Most tenants in England have security of tenure under the provisions of the Landlord and Tenant Act 1954, which means they have the right to renew their lease under similar terms to the original contract but at a revised market rent.
However, if you are considering terminating the agreement, then you may need to serve statutory notices (Section 25 for landlords, Section 26 for tenants) by a certain date. Landlords or tenants can use these notices to set out new terms or, particularly in the case of landlords, reasons why they do not wish to renew. Failure to set these in motion in time could delay the whole process.
At Maunder Taylor, we recommend that our clients, whether they are landlords or tenants, start considering what they are going to do about their lease renewals around 15 months before the current agreement is due to expire.
Under the normal provisions of the Act, landlords would have the right not to offer renewal terms to existing tenants because of late payment of rent, or a substantial build-up of arrears. However, the emergency Coronavirus Act 2020 means that landlords are no longer allowed to forfeit the agreement and initiate the process of evicting the tenant for non-payment of rent (which includes service charges and insurance payments).
Initially this measure was in place until 30th June, but it has now been extended until the end of the calendar year, and it recognises that in the current economic climate some commercial tenants may have difficulty paying their rent.
However, under the terms of the Act, tenants have no automatic right to rent reductions or rent holidays on commercial leases. The Government is also encouraging tenants to pay where possible, even if it’s a reduced figure, as it realises the importance of keeping the economy ticking over and preserving jobs.
Landlords or tenants who are confident about their financial position and still wish to renew the agreement should make a priority of studying the fine print of any contract.
Both parties need to be aware of all the financial implications of both the current agreement and any prospective new deal. It’s essential to establish who is responsible for repairing any damage or general wear and tear to the property, and who will meet the cost of any alterations (for instance, if the tenant wants to expand, or downsize, their operation). These can have a major impact on landlords’ and tenants’ bottom lines in the future.
Maunder Taylor are highly experienced in providing business lease renewals advice to landlords and tenants in Barnet, Potters Bar, Totteridge and many other areas of North London and South Hertfordshire. We carry out comprehensive research for our clients, both of the property in question and the surrounding area.
In the case of disputes, we always encourage both parties to come to a mutual agreement. However, if it proves impossible for landlords and tenants to negotiate terms successfully, we can act as expert valuation witnesses at the County Court or at arbitration hearings. All the cases we are involved in are dealt with professionally, in accordance with Civil Procedure Rules and RICS Practice Statements.
If you would like to know more about our business lease renewals advice service, please contact Jonathan Pryke MRICS, or follow this link or call our Whetstone office on 020 8446 0011.