Issues for a commercial landlord to consider at the end of a lease

Here is a list of 8 things commercial landlords should consider [as the end of the lease approaches]:

1. Review the lease – it sounds obvious, but so many landlords forget to do this.  Check what the lease says about termination, notice periods, renewal options, and any obligations regarding the condition of the property upon termination.

2. A tenant can vacate at the end of the lease term without giving notice – it is therefore essential for you to diarise key dates, so you are aware of any potential premises being empty well ahead of that date, and can take steps to determine a tenant’s dilapidations liability.

3. Communicate – open and clear communication with the tenant is essential.  This allows both parties to know where they stand about what is likely to happen next.

4. Does the tenant want to stay and is the tenancy protected? – If so, and you want to recover possession, you must be able to prove one of the grounds for possession if the tenant wants a renewal lease as the tenant may have an automatic right to a new lease at the end of the term. Has the tenant served a section 26 notice on you – does it have the right to a new lease? Or do you, as landlord, need to serve a section 25 notice on them? There are strict rules when it comes to service of notices, so make sure you get it right or check with us. So often we see landlords in tricky, and potentially costly, situations as a result of serving notices wrong.

5. Try and resolve the issue if you can – if disputes arise during the termination process, it might be sensible to try and mediate or seek legal advice to try and swiftly resolve the issue out of court. Our Property Disputes team has an outstanding track record of facilitating practical and commercial solutions with expert knowledge and application of the law.

6. What happens if the tenancy isn’t protected? – The tenant has no right to remain in the property at the end of the term. If the tenant remains in the property, then steps should be taken to either remove them, or formalise the position otherwise the tenant could inadvertently obtain protection.

7. Dealing with dilapidations – see our recent list of do’s and don’t’s when it comes to dilapidations here: JP Morgan v Sports Direct: Dilapidations dos and don’ts! – Greenwoods Legal LLP

8. Don’t forget to return the deposit if required – if the tenant provided a [rent] deposit, make sure you follow the correct legal procedures to return it. Deductions for damages should be supported by evidence and outlined in accordance with the terms of the lease or rent deposit deed.

We recently advised a commercial landlord client on complex, protracted lease renewals. This included dealing with a scenario where the tenant had formally let part of the premises but was seeking to claim a 1954 Commercial Landlord and Tenant Act lease renewal for the entire property.

The sub-tenant was a well-known entity and was surprised to see the head-tenant had claimed it was using the whole premises for the purposes of its business. We are now helping our client overcome this issue by agreeing a new lease of part with the sub-tenant directly (as the sub-tenant is entitled to this) and disputing the head-tenants right to a new lease of the whole of the premises.

Our Property Disputes team can help advise you on how to protect your position and follow the right steps when dealing with lease renewals or recovering possession of the property. Please get in touch.