With so may tenants preferring shorter and shorter leases, saying they prefer the option of flexibility, then it becomes even more important to keep on top of lease expiries.
for some time now RPS have been pushing for both tenants and landlords to approach each other at an early date to consider and to negotiate a new lease on expiry of the current occupation; A Reversionary Lease.
If you are planning on such an agreement here are our notes on what to keep an eye on;
Security of tenure; Is it part of your strategy for the lease to be inside or outside the protection of the LTA ’54 when it comes to security of tenure? If outside then make sure you meet the strict requirements and timetable to avoid getting it wrong.
Rent review;If the reversionary lease does not commence for some time then consider a rent review on day one to ensure the reversionary lease makes market rent.
Legal & Regulatory Updates; Remind your professional team that the new lease make reflect all legal and regulatory changes that have been instigated since the original lease commenced. (LTA Covenants act 1995, Fire Regulatory Order).
Security; Ensure that rent deposits, bank or personal guarantor agreements, are carried over to the new lease. This could include a rent deposit ‘top up’ if required.
Alterations / Repairs; How should these be documented? Perhaps the obligations can take effect on expiry of the reversionary lease?
Linkage;The legal team must make sure that both the existing and reversionary leases are fully linked (assignment, sub-letting) and that on forfeiture (if required) will effect both leases. this should also include any associated documents / agreements such as licences.
Formalities; All associated formalities such as SDLT, Land Registration requirements must be maintained.
As usual, RPS Ltd, have the experience and skills to help you through to a successful lease and get the best deal for your business.
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