Opinion

Ten things to consider when leasing your commercial property

16th December 2019

Ten things to consider when leasing your commercial property

In her second article focussing on 'top tips for commercial landlords', property specialist Emma Hadley outlines 10 things your solicitor will need to see to make the process of leasing your property smoother (and faster)…

1. Heads of Terms and Plan

If you haven’t yet arranged for Heads of Terms to be drawn up, speak to an agent and ask them to prepare the exact terms which have been agreed.  The more detailed these are, the less negotiation there should be in the documentation, making the process more streamlined.  

2Plan

Please provide a plan of the demise which is to be leased, as soon as possible.  In particular the site plan is essential, so your solicitor can compare this with the Land Registry title plan, and any floor plans which are being used should also be provided as soon as possible.  Any plans provided should be Land Registry compliant, and have a compass and scale.

3. Title Information

If your solicitor doesn’t already have them, title deeds will be required along with details of any current leases, tenancy documents, Land Registry title register and plan to get a full understanding of the property and t enable them to advise you fully.  If you are aware of any missing documents please let your solicitor know.

Your solicitor may also send you Commercial Property Standard Enquiries (CPSEs) to review and prepare replies to.  These provide an overview of the type of information a tenant will require, and these will be sent to the tenant early on in the process.  It is therefore very important that these replies are true and accurate, as they are representations and will be relied upon.

4Management information (if applicable)

This may be applicable if the property is a unit on an estate, perhaps managed by a Managing Agent, or if the property is subject to any tenancies.  If there is a service charge, the tenant will need to see details of the current years’ budget, apportionments, details of caps and the last 3 years of service charge accounts. 

Your solicitor will also want to know if there are any past or current disputes, and details of any ongoing management transactions.

5. Insurance information

Please provide copies of the current buildings insurance, details of the premium payable, and any claims history. 

Your solicitor will also want details of any insurance rent you intend to charge to the tenant, including any valuations, so this can be covered in the lease.

6. Utilities information

This is practical information for the tenant, and details such as service providers, tariff arrangements and supply contracts (for example if there is a septic tank) will be requested.

7. Details of Rent Review (if applicable)

Where you have them, please provide details of any planned rent reviews under the lease, and confirmation of whether this will increase in line with RPI or whether it will be upwards only.

8. Information regarding the physical condition of the property and any environmental matters

Physical condition documentation is important as often the lease will require the property to be maintained to a certain state or condition and the tenant will require this information.  Please therefore provide details of any environmental or asbestos surveys or assessments you may have, along with any structural/ mechanical/ electrical surveys and an Energy Performance Certificate.  Updated regulations require an EPC to be in place at the grant of the lease, so if you do not have one, please ask your solicitor and they will be happy to assist you in this regard.

9. Rates/ outgoings details

Where you have them, please provide details of the ratings assessments, and any correspondence or appeals you may have, as a tenant will want this information.

10Tax/ financial matters

Finally, please let you solicitor have details of the VAT position on the property.  Have you opted to tax?  If so, please provide a copy of that option along with the acknowledgment from HMRC where you have it.  Please also provide your VAT registration details, as a tenant will want to know if they are to pay VAT on the rent.

If you have any queries about the above, or anything else regarding preparing your property to lease generally, please contact Emma Hadley, or a member of our Commercial Property team who will be able to assist.

 

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