Landlords and Tenants are often faced with a situation where it is in the interest of both parties that the Tenant will be allowed occupy the Landlord’s property on a short term basis. This is particularly the case at certain times of the year when a Tenant needs a property for a number of months to sell what is effectively a seasonal product or service. When these deals are done commercially, it is important that they are documented quickly and accurately so as to allow the Landlord make the most out of his investment and to maximise the time which the Tenant will have in the property.
Whether you are a Landlord or Tenant, we set out below our top ten tips which we believe will help both the Landlord and Tenant get to a signed legal agreement quickly.
1. Who is the Tenant?
Identify this at the very beginning. If a newly incorporated company is being used to take the Lease, this should be agreed between the parties at the beginning so the Landlord can make an informed decision in relation to whether or not a guarantor is required. As a Tenant, bear in mind that you will be asked for accounts and references. Have them ready.
2. What premises are being let?
Is the Tenant getting a lease of the entire building or part only? If is part of a building, make sure that you think about how access will be granted to the premises.
3. What services are needed?
Also consider whether or not the Tenant will need services from the Landlord. For example, will the Landlord be providing lighting and heat to shared entrances and corridors? Also, are there restrictions on when the Tenant can open the premises for trade? Will the Landlord be charging a service charge?
4. What payments are due?
What is the agreed rent? Is a deposit payable? Also consider what is included in the rental payment. If utilities, rates, service charge and insurance are in addition, this should be stated.
5. How is the Service Charge calculated?
If it is a short term letting has a fixed amount or cap been agreed?
6. What furniture and fittings are included within the letting?
These should be carefully set out and listed.
7. What are the Tenant’s repair obligations?
Consider the use of a Schedule of Condition. This documents the condition of the premises when the lease begins. In general, the Lease will provide that a Tenant is obliged to repair and to hand back the property in no worse condition than is set out in the Schedule of Condition. They are invaluable for both Landlord and Tenants. It is also not necessary for them to be done by professionals although this is recommended for valuable properties or where there is a lot at stake. Most of us have cameras on our phones. It is relatively straightforward for a Landlord and Tenant to take a set of photos together which can be attached to the Lease.
8. Is the Tenant required to take out its own insurance in respect of public liability, employer’s liability and contents?
If so, make sure that this is notified to the Tenant so that the Tenant has time to put this in place before the lease is due to begin. The general rule is – no insurance, no keys.
9. Is VAT chargeable on the Lease?
If so, this should be stated as soon as possible, particularly where the Tenant is not able to reclaim Vat.
10. Finally, does the Tenant want to carry out a fit out?
If, as a Tenant, you do, then it is important that you advise the Landlord of exactly what you want to do by means of plans and a method statement of the works as soon as possible. Your Landlord will oblige you to make sure that you comply with requirements of planning laws and building regulations. If the works require a revised Fire Safety Certificate, the timing in relation to this also needs to be factored in. Make sure you have your architect or professional advisor on board as soon as possible to avoid delays.
Whilst not exhaustive, these are some of the issues that we encounter as being the delaying factors to the putting in place of legal documentation quickly. If these issues are addressed by both the Landlord and Tenant up front and at an early stage, significant delays can be avoided.