The items below, although not comprehensive, provide an insight into some of the key aspects an occupier should take advice on prior to securing a new lease.
Outgoings – to include rent, rates and service charge all of which will vary from building to building and will require careful analysis to ensure they align with market conditions and are fair and reasonable for the specific building in question.
Lease length – ensuring you have the correct lease length to meet your individual business strategy is essential, flexibility should be built in in the form of tenant break options. You will also need to cover off whether the lease is contracted in or outside the 1954 Act.
Rent free – most leases will attract an incentive period in the form of rent free, the amount granted by the landlord will in part relate to the length of the lease taken. Allowances for carpet and floor boxes can also be negotiated if not already provided.
Deposit – the level of surety required by a landlord will relate to the strength of the specific covenant of the tenant. The landlord will require to see three years audited accounts and will look at the net profit when negotiating the level of deposit. Other forms of surety can include bank guarantee or parent company guarantee.
Alienation – this relates to a tenant’s ability to dispose of their leasehold interest should they outgrow their space or wish to downsize during the lease term. This will typically relate to subletting and assignment rights.
Fit-out – this cost can vary greatly depending on a specific occupiers requirements. Timeframe for action, the level of specification and the layout required can impact significantly on the final cost. Any works shall require a licence for alterations.
Dilapidations – Dilapidations are items of disrepair or defects which tenants are required to rectify or pay to have remedied under repairing covenants contained in the lease.