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Commercial Property
Premises are very often the major asset for a business. Commercial property law can present difficulties whether you own or rent premises and there can be additional legal liabilities and potential costs that you may not be aware of.
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Legal advice can help you understand the main issues for your business to consider both before and after a purchase or lease.
Taking legal advice before acquiring premises, be that either buying or letting, can help to reduce the chance of something untoward happening which could impact on the viability of your business.
Part of the legal process in commercial property transactions is ‘due diligence’ - carrying out the usual searches (for example with the local authority or a desktop environmental search) and also raising enquiries with the sellers or landlord's themselves. It is also generally advisable to have any property surveyed as any physical defects which arise after completion are more than likely to be your problem rather than that of the seller or landlord.
Unless you are lucky enough to have bespoke premises constructed for your business you will need to be aware of the planning history and previous uses of the property. If you want to use premises for a different purpose either now or in the future then that might require planning permission or building regulations consent. In addition, if the premises are leased there may be restrictions in the lease which would either prevent that change taking place or require a licence from the landlord.
Landlord and tenant
A lot of business premises are either leased or rented on a short-term licences. This, for the tenant’s business, provides a great deal of flexibility certainly in the early stages of a new business venture when there is simply not the money nor the ability to borrow to buy premises. The downside of leases are the potential for the landlords to either want the premises back or they want to redevelop the property and the tenant then has to find new premises.
With longer leases these very often contain rent reviews which are generally done on an ‘upwards only’ basis - the rent will never go down. Longer leases also present their own problems - unless you have negotiated a suitable ‘break’ in the lease - If your business needs to expand beyond its current premises then you may need to get out of your lease and this can be a very difficult situation. In such a case good legal advice and help can make all the difference.
Regulatory Issues
Once you have bought or leased a property there are further laws and regulations dealing with - for example - the management of asbestos, fire risk assessments and a whole host of further health and safety responsibilities.
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FAQs
How long should I take a lease for?
No one can be sure what the future holds. Whilst a long Lease may provide you with the security of knowing you will be able to occupy the property for a long period, it also exposes you to long-term liabilities.
Will my rent increase every year?
A Lease of more than three years will normally contain a provision for Rent Review at regular intervals such as every third or fifth year. The rent will typically be increased to the market rate at the time of the review (known as an “open market rent review”).
Who is responsible for the insurance?
It is usual for the Landlord to insure the property however the Landlord will have the right to recover the premium from the Tenant. So you can budget, details of the Landlord’s Insurance Policy should be obtained in advance.
Can the Landlord end the lease early?
The Landlord may have the benefit of a “break clause”. This is rare and for business continuity purposes you should be reluctant to agree to such a clause. However, the Landlord will have the right to terminate the lease for: