It is worth revisiting your commercial lease at regular intervals to take note of any upcoming key dates of your commercial lease to ensure you don't miss anything important and give you an opportunity to enter negotiations should you wish to amend any key terms.
Rent Reviews
Your lease may specify rent review dates. Generally, this occurs every 5 years, but this can vary depending on the lease and may happen more or less frequently. The rent will be reviewed based on a pre-determined mechanism, such as to an open market rent rate or with an RPI/CPI increase. Accordingly, keeping a close eye on these dates can allow you to be prepared for negotiations and potential increases, for example by keeping an eye on the average rents at properties on the market in the surrounding area. Therefore, it is important to monitor the relevant dates for rent reviews, to ensure you are well-prepared for negotiations.
Break Dates
Your lease may specify certain break dates which provide flexibility in the duration of the lease. Although the lease will have a set duration, it may be possible to terminate the lease prior to this date if such a break date exists. This will allow for the early termination of the lease, provided proper notice is given. Therefore, it is important to be aware of the break dates provided in the lease, as well as being familiar with the relevant timescales for providing notice to exercise this break. This will also allow you to be as prepared as possible to make decisions on whether exercising the break option is desirable and ensure you meet any specific conditions of exercising this right which may be in the lease, as well as making sure these dates are not missed.
Redecoration
Additionally, your lease is likely to set out specific redecoration provisions. This may require the property to be redecorated at certain intervals, for example, annually. The scope of redecoration can vary from just applying a fresh coat of paint to undertaking more extensive renovations. By being aware of these redecoration dates, this will allow you to be aware of whether this is a redecoration year or not, allowing compliance with the lease terms.
Alienation
Some leases prohibit assignation or sub-letting of the lease in the first 3 years. This period may now have expired and provide you with new opportunities with the lease.
Expiry of the lease (tacit relocation)
Lastly, this year may be the year your lease is set to expire. It is imperative that you are aware of the expiry date of the lease. In Scotland, commercial leases do not automatically end on the end date specified in the lease. Instead, if no timely notice is served, the lease will continue (most commonly for another year). For most leases, the notice should usually be served 40 clear days before the specified date of expiry in the lease, however the terms of the lease should be checked as a longer period may be necessary. The notice given should be formal to avoid this being done incorrectly and to ensure the lease is properly terminated. Therefore, it is crucial to check the end date of your lease to ensure plenty of notice can be given for terminating this and for appropriate legal advice to be taken.
At the end of a lease, there are usually provisions requiring the tenant to remove and restore any alterations made. Being aware of the end date of the lease allows for plenty of time to check what works will be required by the end of the lease and to organise these or check with the landlord that this is still what is desired to avoid unnecessary costs.
Overall, it is important to review and diarise any key upcoming dates to avoid missing any of the above important dates.
If you have any questions or concerns, please do not hesitate to contact Breda Deeley or your usual Brodies contact.
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