Random; any commercial LL here? What do you do with a lease When the tenant wants to stay

[Summerwhereareyou]

But the lease is expiring?

Do you have to pay for a whole new lease? Pay for an extension on original terms?

A very non hopeful bump for the one poster from years ago who I remembered had a c let!

You can extend by a ‘lease by reference to the last’ depends how modern the lease is, if it’s fairly up to date its very simple.

Subject to dates, break dates and rent levels etc.

That is presuming you also don’t want to look at dilapidations at this point.

You can also roll.

When is your lease due to expire? I would have thought the landlord would get in touch to give you options. Does your current lease not mention what happens at the end of the lease?
Dilapidations as previously mentioned can run into the thousands (sadly speaking from experience)

Also is it a protected tenancy inside the Act? Because they are very different.

I've got the responsibility for a commercial lease that expires in a couple of years; we're expecting to do a detailed renegotiation as the last lease was 25 years with 5 yearly rent reviews, the rent has fallen a long way behind (tenants dragged their heels on the last review), plus the current tenants took over the lease a few years ago. It is likely that we will agree altered terms as the previous ones are less suitable for current times. I suspect the current lease was little altered from the previous 25 year lease!

I am the ll , tenent wants to stay.
We are outside the act.
The last lease was done 5 year's ago

Does a solicitor do all this?

I didn't have a proper schedule done when she first took the property.
I have done quite a bit of work to it (as has she)so as far as dilapidation go ,I'm happy to start with a clean slate and on lease renewal have new photo's etc done

Offer a new lease by way of reference, it’s a lot cheaper and quicker, and you have that option outside the act. The tenant should arrange a Schedule of Condition which you should both sign as a fair representation of the condition. It should be done by a solicitor of the original lease was as I’m presuming it’s quite a hefty lease?

FAQ I currently have COVID and my brain is foggy and dizzy.

May I clarify, " offer a new lease by way of reference", is that the actual title of the potential lease we need.

The original solicitor isn't at the firm anymore
,Yes it's a hefty lease

Any idea what the cost of this will be or is it an issue because original solicitor isn't there any more?

Sorry that was @FAQs

And even if solicitor left should I get that company to do it? Does it matter?

Hi, yes that’s the phrase to use, it’ll probably be around £850 + Vat but that’s for a simple extension, which for a lease only 5 years old it should be really simple, it’s also unlikely to be required to register with land registry and unless any major changes to the area I also wouldn’t bother with searches, again that’ll save money.

The tenant should pay for the Schedule of Condition, it is for their use at expiry.

It doesn’t matter who does it as long as you have dated copies.

FAQ that's so helpful thank you..still costs a fair whack though! Original lease was about a grand!

If you are not raising the rent you could use this as a bargaining tool and request a 50/50 split on the cost which isn’t unheard of. I guess it depends if the tenant is also instructing their own.

You can also let it roll, this doesn’t offer as much security though as either party can submit notice at any time, industry standard is 3 months.

The cost of leases is getting really high now, it’s certainly raised in the last 24 months.

I’ve been presuming you are in England/Wales, Scotland is different, their leases are worded again!

*worded quite different.

There are lots of free leases such as law depot but they are very woolly! It’s worth the investment of a solid lease because you don’t know what the future holds and you have more control over for example a request for an assignment.

Thank you so much.
Yes I am raising rent it was really really low to begin with so not raising it much.

Is letting it roll also a process.

To be honest, any issues we have had have always been unclear how to proceed in the lease!

Yes we are in England.
I'm just assumed this lease by reference was some sort of letter ...legal agreement to continue.

It’s a bit more, it’s often a much shorter ‘mirror image’ document with just the modifications such as the new rent level, dates, it might include reference to deposit deed if applicable.

If you have a standard lease it’ll probably be anything up to 30 - 43 pages if it includes maps etc. A reference to the last would be nearer 12-14 pages.

Letting it roll isn’t a process, you might agree it in an email to continue on the same terms, however as you are raising the rent that ought to be formally documented as above it just offers you more protection, a lease is harder to get out of than a marriage. (Im only half joking)

Former property lawyer here. Presuming you are the landlord and the lease is excluded from the ‘54 act it is in your interests to make sure the new lease is properly documented as the tenant can acquire security of tenure if you do nothing on expiry of the current lease and continue to accept rent. That will make it more costly and difficult to remove them down the line if plans change and you want to re-let / redevelop etc. The lease by reference can be just a letter or a very simple document but will need to have statutory notices served on the tenant to exclude security from the new lease.

I'm so grateful to you both for this help!
It's a hard topic for me especially with this COVID!
I know what to ask for now at solicitor and what to expect.

Yes and opt out if you do think you might want to take it back or re develops the site otherwise you might have to pay compensation to the tenant depending on the reason.

The other reason I wouldn’t let it roll is if you have a good reliable tenant and it sounds like you do you want to hang onto them and secure them, a realistic rent is better to secure them (you sound reasonable) you can always include rent reviews, year 3 is standard on a 5 year, although they might to balance that with a 3 year break clause.

Due to the high vacancy rate in some towns the Government are currently considering a levelling up scheme, the first draft has talk of auctioning off rents of units vacant for more than 6 months and giving the council the power to force landlords to accept the rent, in reality I’m not sure how this’ll work, certainly for leases over 12 months. If you Google it you’ll see the draft details.

Securing a good tenant and having that income on a solid lease will certainly be worth the solicitors fee because I think rents might go down.

Also get better soon, Covid seems to be rising again, certainly around our area it is.