Many commercial leases are ‘contracted out’ of the Landlord & Tenant Act 1954 (as amended). Landlords often insist that tenancies particularly in multioccupied buildings are contracted out, which maximises their flexibility to obtain vacant possession at the end of the term.
This means that upon expiry the tenant lacks any statutory right to renewal. If the landlord is willing to grant a new lease then the tenant still lacks any right to a new rent at open market value and/or with market based incentives.
The common trap here for tenants is to start renewal negotiations too close to the lease expiry date. Landlords are adept at using this situation to their advantage over the rent level and other terms, as the tenant becomes increasingly anxious to settle and avoid the potential business disruption and cost of moving.
When approached well in advance a forthcoming lease expiry can offer the occupier a great opportunity to reconsider the property requirements of the business, and use leverage through carefully considered negotiations to optimise the terms of renewal.
Lease restructuring may be possible at any time during the lease term, typically where the tenant is willing to extend its length of commitment and the landlord is keen to enhance investment value by prolonging the income stream.
Turner Morum specialises in advising and negotiating lease renewals and restructures on behalf of occupiers. We can provide detailed financial analyses to compare the costs of renewing with relocating, bringing together the recurring outgoings of rent rates and service charges with the one off costs of fitting out and dilapidations.
Recent projects include:
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- Bridge House, 4 Borough High Street, London SE1
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- Edgington Way, Sidcup, Kent
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- Toshiba Court, Weybridge
