In the rush to complete deals before Christmas, it is essential not to overlook important points when negotiating leases.
In this light-hearted (and rather selective) lease review, we consider some of the clauses that landlords and tenants need to keep in mind.
Use of roof space
'The Landlord grants the right for seasonal visitors to the Premises to park reindeer and a sleigh on the roof of the Building and a right of access from the roof to the Premises.'
Leases of part and some leases of whole will not include the roof or any space above the roof in the letting to the tenant. If the tenant needs to install air-conditioning units, satellite dishes, aerials, extraction fans or other equipment necessary for the use of the premises, it will need specific rights to use an area of the roof (or another equally convenient area) to install the equipment. Rights to connect that equipment to the premises through service risers will also be required.
'Before 24 December in the first year of the Term, the Tenant shall carry out works to install at least one chimney leading from the roof of the Building to the Premises.'
On the grant of a lease, the tenant will usually want to carry out fitting-out works. The landlord should consider whether there are any specific works that it wants the tenant to carry out. On lease renewals, consider whether the tenant should be under an obligation in the new lease to make good any dilapidations (by reference to a schedule of disrepair).
Repairs and maintenance
'During the season of Advent and, in any event, before 24 December in each year, the Tenant must arrange for all chimneys in or connecting to the Premises to be properly swept.'
The extent of the tenant's repairing and maintenance obligations needs careful thought. The tenant is usually required to keep the premises in good and substantial repair and condition. However, if plant and equipment is installed outside the premises, these items may not fall within the definition of the premises. A separate obligation to repair and maintain them will be required. The landlord should therefore consider whether there is anything not included in the definition of the premises that the tenant should be required to repair and maintain.
Where the tenant will use the premises for catering, whether as a café or restaurant or with a staff restaurant, the repair and maintenance of pipes and vents is important to prevent the build-up of grease, which both creates a fire hazard and can lead to drains becoming blocked (which can be very expensive to remedy).
Use of the premises
'During the period from sundown on 24 December to sunrise on 25 December in each year, the Tenant must keep access to the chimneys on the Premises free from obstruction and must not light or keep lit any fires in the grates at the bottom of those chimneys.'
Open fires are not very energy efficient, which is a reminder that the minimum energy efficiency standard (MEES) will apply from 1 April 2018. From that date, any property (whether residential or non-residential) that has an EPC rating below E cannot lawfully be let unless the landlord has carried out required energy improvement works or is able to claim the benefit of one of the exemptions set out in the MEES regulations.
Restrictions on the sale or provision of alcohol
'The restrictions in this Lease on the use of the Premises for the sale or provision of alcohol shall not apply to the provision of one glass of sherry on the evening of 24 December in each year.'
The lease will often contain a series of restrictions on the use of the premises. Consider whether they are appropriate or need to be amended. For example, a restriction on the sale or serving of alcohol would prevent office parties or celebrations. Similarly, a restriction on the cooking of food would prevent the provision of a staff canteen.