Colin Cannings of Cannings Connolly Solicitors: a specialist recommended by FindaLondonOffice
Once your surveyor has negotiated the heads of terms for your new leasehold premises, you face the prospect of instructing a solicitor to deal with the Lease. This is something which daunts even sophisticated businessmen – Who to choose? How much will it cost? Will the whole deal get bogged down in jargon and delays?
In point of fact, the whole procedure can be simply explained and dealt with quickly if the client, the agent and the solicitor work as a team. If you are taking leasehold premises, there are essentially two routes available to you:
If you are taking a transfer, called an assignment, of an existing lease then there is very rarely any opportunity to renegotiate. You will need a report on that lease, written in plain English, explaining the most significant provisions such as how long the lease has to run (the term), what the rent is and how the rent reviews, if any, operate, what your repairing obligations are, how the service charge works etc. You would also need consent of the landlord to the assignment – called a licence to assign. If your landlord is himself a tenant, then in all probability he will also need consent from his landlord, so it becomes rather more complicated and this is often the cause of those frustrating delays you hear about! However, a well organised team can speed things up by having references and accounts etc ready so that you limit the time-wasting questions.
The process here is that the landlord’s solicitor submits a draft lease and the tenant’s solicitor negotiates it by amending. In reality, the scope for amendment depends on the market and how much competition there is for that particular space. An experienced solicitor knows which points to worry about and which points he knows a properly advised landlord would never concede. At the end of the day, you have to remember that a lease is a contract like any other, and whilst an experienced commercial property solicitor will know the market and know what the market orthodoxy is, a healthy dose of commercial judgement is needed to avoid wasting time over academic points.
Having said that, there are certainly issues to be negotiated over many basic provisions, particularly to ensure that the rent review is on a fair basis taking into account rent-free periods and other inducements given to tenants in the market as a whole, so that you do not end up paying what is called a headline rent; that the user is not unduly restrictive; that the service charge works fairly and is not a licence for the landlord to improve his investment at the tenant’s cost; that there are no clever lawyer points making it more difficult for a tenant to exercise a break clause; and that the tenant is properly protected by the insurance provisions.
There are two other points worth mentioning. A commercial property lawyer will carry out appropriate searches, principally a local search, on the premises with the local authority, to ensure that there are no public proposals affecting it etc. Local searches take about two to three weeks so if you are in a hurry, ensure that that process is started sooner rather than later. The other point relates to what solicitors like to call security of tenure, ie will you have the protection of the Landlord and Tenant Act 1954 which means that you are entitled to renew your Lease at the end of the term unless the Landlord wants to redevelop or occupy the space himself? This is something which is usually negotiated at heads of terms stage so it is worth speaking to your agent if this is important to you.
For more information on Colin Cannings and Cannings Connolly Solicitors, please visit their website: www.cclaw.co.uk