YES, it does……………

but it will depend of how either your head lessee and liquidator wish to proceed so start by contacting them.

Firstly it is likely that your immediate landlord is not paying the rent or other demands (insurance, service charge etc). Therfore you may receive a S.6 notice from your superior landlord requesting payment directly from you.

The superior landlord may consider forefeiting the lease if able to do so. He will have the liklihood of re-letting in mind and so economic conditions will have a bearing. You couls apply to the court for relief against forfeiture but the court has the discretion to insist on onerous conditions that you must consider.

Alternatively your landlords liquidator (after adminstration) has the ability to disclaim the lease (only the liquidator can forefeit a lease). If this occurs your rights and liabilities in relation to the property are extinguished. But if you continue to make rental payments (and they are accepted) you can apply to the court for a vesting order so you can step into your landlords shoes and become tenant under the headlease.

If your having problems with your lease, landlord or tenant then contact any of the team at RPS who will be happy to discuss your options with you.

Get it wrong and you can forfeit the ability to exercise the option, a very expensive mistake. So here are our notes and guidelines to help minimise those mistakes.

1 Read your lease. Then……..re-read your lease.                                                This is the arbiter if there is a dispute. So keep to the rules of the lease even if they seem not to follow common sense. It is easier for the other party to dispute your actions if you fail to meet the strict lease requirements.

2 Don’t leave it to the last minute. Plan your moves well in advance and in conjunction with your business plans and get your estates working for the business and not your business working around your lease(s).

3 Who are you issuing the notice to? The landlord, the tenant, the agent or A.N. Other? Again check the lease requirement. If you want to send it to the legal team as well then ok, but check and re-check what the agreement, contract or lease requires, as an absolute minimum.

4 Check and re-check what is to be done and when.

5 Keep a diary of events.

If you are unsure what is to be done, or even if you have a lease break option then contact the team at RPS Lt and let us manage your options for you.

If you think retailing may be for you, perhaps you have a product you want to trial, or just want to make the most  of an opportunity during a special period such as Xmas, Easter or event in your town, then a short term letting could be for you.

These short term occupancies, sometimes known as ‘Meanwhile Leases’ can bring life back to a property or be used for a community benefit and rejuvenate surrounding areas. So, if you think it’s for you and you’ve seen an opportunity here’s some RPS comments for both the landlord & tenant to take note of to protect yourselves;

• A 42 day letting can trigger a further business rates relief period for landlords. So consider this when looking at business rates mitigation plans. Don’t leave this just to your retail units. Look for similar opportunities in your office & industrial properties.
• Tenants, as the landlord is likely to gain from your occupation, push for very low nominal rental.
• Ensure the occupancy does not attract Security of Tenure and falls outside of the LTA 954 Pt 2
• Consider a licence instead of lease
• Make sure you cover issues such as service charge, dilapidations professional fees and insurance premium contributions. We suggest a tenant seeks to confirm all charges are included within the rental charges. See our previous blogs regarding occupancy costs.
• Planning may be an issue so ensure you cover this in your negotiations. Can you use the property for the purpose you want!
• A landlord letting a property is less likely to see the property suffer from vandalism or squatters and is likely to see a reduction in void property costs.
• Landlords, consider promoting and marketing your properties to attract short term occupancy. Make it easier for you to benefit from your property being used whilst we wait for the economy to pick up.

At RPS we see these short term lettings as win – win situation but only if planned and drafted correctly. They have sound business foundations and a shrewd business operator and landlord will see quick benefits from such an occupation.

 Also known as the ‘Purple Book’ it is a guide to best practice in commercial agency applicable to UK commercial agents from marketing (within the envelope of the 1991 Misdescriptions Act) through to money laundering. But it also offers a useful source of reference for clients and other stakeholders.

It refers only to direct property ownership for both occupation and investment, not to

forms of indirect investment.

It is particularly important that those practising in this field should be reminded

of the duties and responsibilities they owe to the clients of their services, as

many key financial decisions may have potentially serious implications.

The aim of this guidance is to ensure that clients can be assured they will receive

a standard quality service from all commercial agents, and to help to improve

standards in the sector by raising public and professional awareness. A further

objective is to encourage agents to aspire to the highest operating standards

through the training and on-going development of their staff.

Both agents and clients should make themselves aware of the key aspects of the guidance that includes chapters on;

Ethics; Duty of care, conflicts of interest, the Bribery Act 2010

Securing instructions; Information to be provided under the Estate Agency Act 1979, when clients must pay.

Disposal / marketing of property; Explanation of auctions & tenders, the Property Misdescriptions Act 1991

Acting for Seller; Information the agent is bound to supply.

Letting a property; Glossary of terms & key terms

Acquisitions; Guidance for agents searching on behalf of clients.

Ending the Instruction; Helping to tie up loose ends

Safety & Security; Data Protection Act

Agency Management; Promoting good practice.

This further supports the advice from RPS Ltd that by appointing RICS chartered Surveyors to act on your behalf is the best way in ensuring that your position is protected by a body that sets guidelines and standards that protect and enhance the  commercial property agency industry.

Landlords, or more accurately their appointed surveyor, will often include charges in addition to repair works identified at the property. These have included;

VAT, Preparation fees of the schedule, Supervision of works, Solicitors fees to serve the schedule, insurance, business rates and loss of rent.

The landlord may claim loss of rent that cannot be recovered from a new tenant for the period whilst he is carrying out of repairs after lease expiry. The landlord’s theory here being that if the tenant carried out the works then the landlord could potentially lease from day one after the tenant leaves the property.

But most claims for have failed. For a landlords claim to be successful he must be able to demonstrate that the condition of the property and state of disrepair directly led to the loss of rent from the next tenant. The landlord would also have to prove the next letting was immediately awaiting occupation. And in this market proving both these requirements is very unlikely although property with a very demand, such as major high street stores, will have a stronger case.

The true cost of works plus other losses must be a natural and foreseeable consequence of the breach. The landlord can only recover monetary loss.

As usual the RPS advice is twofold.

1; You should start considering your dilapidations strategy (and your long term property needs) 18 months in advance.

2; Read the lease. This is the arbiter and should set out how dilapidations & repairs are to managed and when any landlords dilapidations schedule may be issued. Sometimes even after the lease has expired!