Level 2 - Lease Renewal Croydon Flashcards
Talk me through this example.
Acted on behalf of an occupier for the lease renewal of an industrial premises.
Reviewed the lease and confirmed it was protected under the Landlord and Tenant Act 1954 (security of tenure).
Inspected the property and measured it on a Gross Internal Area (GIA) basis.
Researched comparable industrial units to form an opinion of Market Rent.
Advised the client to serve a Section 26 Notice at least six months before lease expiry, including proposed lease terms.
Client instructed me to proceed based on my recommendation.
Entered into negotiations with the landlord’s agent to agree the terms of the new lease.
How would your advice change to a client who was a tenant if their lease was outside the Act?
Given the client would have no automatic right to renew and that rents are rising, the landlord may take advantage of the market conditions to demand a higher rent or refuse renewal. I would therefore:
* Start negotiations well before lease expiry to avoid losing leverage
* Express the tenant’s interest in renewing and explore the landlord’s position
* If the landlord is open to renewal, negotiate terms before market rents rise further
* Potentially consider other options is renewal isn’t looking likely
* Start informal/negotiations twelve to eighteen months prior, to make the landlord aware they are wishing their intention is to renew the lease.
* Start early in case the landlord refuses gives time to look for alternative options
* You can also do a regear/extension does not have to be a renewal
You measured in GIA. What did you include and exclude?
Included: Main internal space, storage areas, internal walls and partitioning’s, permanent mezzanines
Excluded: stairwells, fire escapes, canopies, external areas such as car parks
How would you measure a GEA of a mid-terrace property?
Work out wall finish and measure external width
Can measure length from the end of the terrace if same length
If unable to go on site, you could go back and measure on Edozo or even google maps
When serving your S.26 why did you have to give at lease 6 months’ notice?
- To give the landlord time to consider the renewal request, and he has 2 months to oppose
- Time for negotiations for new terms
- Prevent Last-minute uncertainty
How did you determine which terms to propose to put in your s.26?
- Client’s objectives
- ERV put at passing rent as the market was rising
In what circumstances can a landlord oppose a lease renewal under the 1954 Act?
Under Section 30(1) of the 1954 Act, the landlord can oppose renewal on various grounds, including:
FAULT BASED GROUNDS - Ground (a): Tenant’s failure to repair. Ground (b): Persistent delay in paying rent. Ground (c): Breaches of other obligations .Ground
PARTIAL FAULT BASED - d): Availability of alternative suitable accommodation.
NON-FAULT BASED GROUNDS - (e): Landlord’s intention to occupy for their own business. Ground (f): Intention to redevelop the premises.Ground (g): Landlord’s intention to occupy as a residence.
Why did you measure the property on a GIA Basis?
Industrial properties are typically valued on a GIA basis, as defined by the RICS Code of Measuring Practice. This ensures consistency in comparisons, as most lease agreements and market transactions in the industrial sector also refer to GIA.
What key lease terms can a tenant propose when serving a Section 26 Notice?
Without prejudice subject to contract
New rent (based on market evidence).
Lease length (aligned with business needs).
Rent review provisions (e.g., frequency and basis).
Break clauses (to retain flexibility).
Repairing obligations (to limit liabilities).
Alterations and alienation clauses (for flexibility in use and assignments).
Who were the occupiers on the estate?
Occupiers: Magnet, Right Tiles
What was the key comparable in the renewal?
Key comparable – Right Tiles – Unit 9 (11,372) LR – 2024 – NE: £15.50 - adjacent/next door unit
