Newcastle Solicitors

What specific  issues are there for office leases ?

Hours of use

This has now become an important issue as working hours have expanded and are more flexible in many businesses. It is generally therefore advisable that arrangements for out of hours use are provided for in the lease. Landlords may try to charge extra for out of hours use for heating, lighting, air conditioning, and security, so this issue should be clarified.

Parking

Parking can be a significant issue. A business may need visitor parking and security for parking.

Service Charge

With an office building, service charge for the common parts of the property may be included in the lease, which could include upkeep and maintenance, reception areas, escape routes and parking.

Break provisions in the lease

These can be unilateral (break by one party) or mutual (both parties must consent). A formal notice to break will generally be required, and time limits for serving this need to be strictly adhered to. The lease may well also state that the break clause only applies if the premises  are returned in accordance with the physical condition required in the lease. If the property is not handed back in a way that conforms with the covenants in the lease, the tenant could risk being held liable for the rest of the lease.

When does a lease need to be registered?

If a lease is 7 years or over in duration, then the lease needs to be registered at the Land Registry, which adds extra cost, in terms of legal fees, land Registry fees and the lease must comply with Land Registry requirements and have an adequate lease plan. Registration does provide some extra protection for tenants as their legal interest is formally registered and will be known to 3^rd parties such as the Landlord’s lenders and/or others.

The lease of my business premises will come to an end within the next year and I intend to move out. What will my dilapidations liability be?

Most leases provide that tenants have an obligation to leave the premises in a good state and condition of repair and decoration at the end of the term. There may also be an obligation to reinstate any alterations carried out during the term. Failure to do so will be a breach of the lease contract which may entitle the landlord to claim damages for any loss suffered as a result. There may also be an obligation in the lease to put the premises into a better state of repair than existed at the start of the lease.

As tenant, you must decide if you have a liability and the extent of that liability. The extent of your liability could depend on the length of the lease, the landlord’s plans for the premises and the state of the letting market. If there is potential exposure you need to consider whether to carry out the repairs at your own cost or leave the premises out of repair and negotiate a financial settlement at the end of the term with your landlord.

I am entitled to a new lease under the Landlord and Tenant Act 1954. Can I renegotiate the terms of the new lease?

The general rule is that the law will only interfere if the parties cannot agree suitable terms between them. If terms cannot be agreed, the law provides that the new lease should remain the same other than annual rent and other minor changes for modernisation. If the parties fail to reach an agreement the Court will decide the terms. The Court must have regard to the terms of the current tenancy and to all relevant circumstances. The rent will be for the amount which the premises might reasonably be expected to be let in the open market.

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