Rental lease contract

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GlitterTreats8614

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Hi ,

I am looking at taking on lease for a salon and just wanted to check whether the terms so far seem normal. I am going to contact a solicitor as well but thought I'd see if anyone on here had any advice when looking at taking on a lease.

10 year lease with option to break by both parties at 5 years.

Annual lease cost at £xxxx for the first 18 months. (as existing).

First rent review at 18months with an increase of 10% subsequent reviews every 3 years thereafter.

Deposit payment of £2000 to be made prior to taking entry to the premises. Held over to completion.

Rent to be payed upfront on a monthly basis. Date to be agreed.

Each party to pay their own legal costs.

My main questions are:
- Have most people signed into minimum 5 years or if not, what have you signed into?
- after the 5 years there could be a rent review and I'm stuck in a lease for that time but the rent could go up to who knows what. Is that the way leases generally work.

Going to start trying to do some research but not 100% sure where to look first!

Thanks x
 
Hi
Just a couple of points:
Does the break at 5 years need both parties to consent or just one?
How much refurbishment work is needed and are you solely liable for this cost?
How many months rental does the £2000 deposit cover?
Why is there a 10% increase only after 18m? Is the first 18m at a discount?
 
Hi

I'll need to check if it's both parties or one. (Thanks!)

No refurbishment at the moment. I currently work in the salon, my boss rents the lease at the moment but wants to move on. There is 18 months left on her lease, so the landlord has agreed to start a new 10 year lease with me but at the current rent, then increase by 10%.

£2000 is just over 3 months, at the moment the rent will be £595.
 
5 year break is both parties
 
10% is a large increase. Mine is 5% after 6 years.
6 year contract break clause after 3 x
 
I'd get a commercial surveyor's advice. Not all take on lease negotiations but the ones that do will cover their fees and potentially save you a fortune.

It's not a good time to be a commercial landlord. The economy is uncertain and many businesses are reducing their rent overheads by renogotiating their leases, closing down stores and moving out of the High Street. This has a trickle down effect.

My lease is up for renewal this year after 4 years. My landlord offered me a RPI linked increase and I replied by email that I was conducting a value for money exercise. I sent the email at 10pm and at 8:30 the next day I had a reply offering me terms at the same rent as before...

Look at it this way. Your Boss wants to move on. She's legally committed to pay the rent for another 18 months. When she leaves she might have to redecorate and bring the place up to reletting standard as part of her terms and conditions. Your Boss is potentially gaining a great deal by moving on now and shifting her lease obligations on to you.

Your landlord has 18 months to find another tenant. If the outgoing tenant (your Boss) doesn't have to refurbish the place up for reletting then your landlord will have to do it and he'll need a gap period to do the work. Or someone might sign a lease and offer to take the place as is - but not pay rent for a period of time to cover the cost of refurbishment.

Your landlord is saving a lot of money in lost rent, refurbishment costs and agency fees and possibly rates payments (you have to pay rates on empty properties of you're the landlord).

Your landlord might not be up to speed about the realities of the commercial rental market - or you might be looking in an unusual area where rents haven't slumped as they have done over the rest of the UK. I'm in Bath which hasn't had quite as many problems as many areas but it looks as though my rent is high compared to the current market rate.

I've nothing against solicitors but they don't give you the business advice that a surveyor will. They also don't know what the market rates are, nor what other tenants are negotiating. If you were buying or selling a house you wouldn't expect your solicitor to advise you whether it was a good deal and the same applies to commercial leases. You need your hand held and this isn't what they do. I've also had solicitors hold my hand twice through leases on other sites and I've still ended up with a poor deal - a surveyor might have helped me gaze into my crystal ball a bit better...

Im concerned that the deal looks great from your Boss and Future Landlord's point of view, but it doesn't look awesome from your point of view. That doesn't seem fair nor equal to me.
 

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