Once you have your lease in place and are in occupation it is easy to get caught up in the day to day running of your business without going back to the deeds. However, it is worth taking a step back every now and then to review if there are any keys dates coming up on the horizon.
Break Dates
Tenant only break options are often put in place to allow flexibility in the lease term when the thought of a longer lease can be daunting. They also have the benefit to an occupier of allowing you to take stock of your current lease terms and whether they are still competitive in the market. If as a tenant you are looking to exercise your break you will need to make sure you check the timescales for giving notice to the Landlord and ensure that you are in compliance of any conditions of the break - is the rent up to date and can you end any subleases that are in place?
Rent Reviews
Open market rent reviews are usually every 5 years of the lease term although can be more frequent. It is prudent to keep a close eye on rents for comparable properties in the vicinity so that you are armed for rent negotiations. If you do have a break option that coincides with the review you may be able to use the potential that you may exercise this in moving negotiations in your favour.
Decoration cycle
Your lease will have a provision for decoration internally and, where applicable, externally. Frequently this is on a 5 and 3 yearly cycle respectively. Being aware of the timescales ahead avoids breach of the lease terms - and receiving (and having to pay for) a notice requiring such works from the Landlord. You can also try to minimise the number of decoration cycles in your final years as there will likely be a provision stating that you must redecorate in the last year of the lease but not more than once in any 12 month period
End of Term
In the final year of your lease it's also worth checking if the Lease entitles you to seek clarity on what, if any, of your alterations the Landlord requires you to remove and reinstate. Even if there is no such provision, and the default position is that you are to remove your alterations, it may be that Landlord might have changed their position on this from when the lease was originally negotiated.
If you are not able to reuse the items of your fit out yourself you may be able to persuade the Landlord that leaving your alterations in situ is the most economic and beneficial way forward for both parties and for any incoming tenant. It is also worth encouraging the Landlord to consider the broader environmental impact of an unnecessary strip out which will inevitably be followed by a fit-out by the incoming tenant - the Landlord might be persuaded that reusing an existing fit-out demonstrates their "green" credentials. This really is worth consideration by all parties.
Alienation
Some leases contain a restriction on assigning or sub-letting in the first 3 years or that during this period the Landlord has a right of pre-emption. Has that period now expired? Does this open up options for you that you now wish to explore?
A quick review of these key terms now will help set you up for the duration of the lease.
Should you have any questions or concerns, please don't hesitate to contact Breda Deeley or your usual Brodies contact.
Contributors
Senior Associate
Partner
