The Lease and Legal Issues

The legal issues that need to be considered and reflected in the lease once terms have been agreed.

3.2 Internal Repairing Obligations
Internal repairing obligations are usual where you are being granted a lease of part of a property. You will be responsible for keeping the interior of the property in good repair and condition and to redecorate the interior of the property at regular intervals.

The landlord will retain responsibility for keeping the exterior of the property and its structure in good repair. The landlord's costs are recovered through a service charge which you will have to pay, usually at the same time as the rent is paid. You should discuss the service charge provisions with your lawyer to establish what services are provided, how your proportion of the cost payable is calculated and whether there is a sinking fund, (monies collected by the landlord in anticipation of future expenditure). You should ask to see details of the previous three years' service charges so that you know the likely level of service charge payments you will have to make. Your lawyer will ask the landlord's solicitors whether there are any major items of expenditure anticipated which would increase the level of the service charge.

4. Insurance
The insurance of the property is usually carried out by the landlord. You will refund the insurance premium, usually by one annual payment to the landlord. You should discuss the insurance provisions with your lawyer to ensure that they are adequate and that the insurance monies will be used to make good any damage arising from any of the insured risks.

5. Assignment and Underletting
The right to assign the lease to a new tenant or to create an underletting is an important right for you. You will need to discuss the following points with your lawyer.

5.1 Does the lease give you the right to assign the lease to a new tenant? Most leases, except those granted for a very short term, will allow you to assign the lease, provided that the whoe of the property is sold. The consent of the landlord will usually be required. Whilst consent cannot be withheld unreasonably, there will be restrictions on assigning the lease which you should discuss with your lawyer.

5.2 Does the lease give you the right to underlet the whole of the property? The right to underlet the whole can be important for two reasons. First,whilst the landlord may not be willing to permit you to assign the lease to a new tenant, it may be willing to permit you to create an underlease. This is because you will remain directly liable to the landlord, whilst you are responsible for the undertenant. Secondly, the person who wants to occupy the offices may not want to take on full responsibility for your lease. An underlease allows the undertenant to occupy for a shorter period of time.

5.3 Does the lease allow you to underlet part of the property? This right is important when larger offices are being let. You may not need all the office space immediately. A right to underlet part allows the space that is not required to be let to another tenant for a short period.

5.4 Does the lease allow you to share the occupation of the property with your group companies. This right will be important where larger companies want to allow two or more of their companies to occupy and use the property.

6. Security of Tenure
Leases are granted for a fixed term. When the term expires, if you want to continue to use the property, you have the right to remain and to be granted a new lease. If the landlord can satisfy an number of limited grounds, principally if it wants to use the property itself or redevelop the property, it can object to the new lease being granted. The court will determine if the landlord can refuse the grant of a new lease to you. If the landlord can refuse the grant of a new lease, it generally has to pay compensation to you.

Some leases are granted on a "contracted out" basis. This means that before the lease is granted, you and the landlord apply to the court for permission to grant the lease on the basis that your right to use the property once the lease comes to an end is removed. This means that the landlord has the absolute right to remove you from the property once the lease comes to an end.

7. Break Clauses
Some leases include the right to bring the lease to an end before the term granted by the lease expires. You should check with your lawyer to establish whether the landlord has this right. The right for you to bring the lease to an end can be useful if you are not certain of your long term needs for the property.

Legal Costs
Your lawyer's costs for acting for you will usually be charged on the basis of the time involved. You should ask your lawyer for an estimate of the costs that will be charged at the outset of the transaction. You should also check with your lawyer to see whether you are responsible for paying the landlord's legal costs as well.

In addition to legal fees, stamp duty may be payable. Where a new lease is being granted stamp duty is calculated as a percentage of the rent payable. You should ask your lawyer how much this will be.

Where the lease is granted for a term of 21 years or more, the lease has to be registered at the land registry. Land registry fees are payable depending on the level of rent payable.

The Lawyer's Role
Once your surveyor has agreed the terms upon which you will occupy your new offices, the lawyer's role is to ensure that these terms are reflected accurately in the legal documents that will give you the right to occupy the offices. The lawyer will also ensure that there are no legal or practical impediments to your using the offices. Understanding the Language

Like most professionals, lawyers are prone to using technical terms. The following terms are those most commonly used:-

1. Landlord and Tenant. The landlord is the person who owns the offices. He grants the right to occupy the office to the tenant. The formal document that grants this right is called the Lease. Where the landlord grants you a new lease, your lawyer will negotiate the terms of the lease with the landlord's solicitors to ensure that it fairly represents your interests in the property.

2. Assignment. Where you are purchasing an existing lease, the lease is assigned to you by the old tenant. You then become responsible to the landlord for paying the rent and complying with the provisions in the lease. Your lawyer will report to you on these provisions. The consent of the landlord will usually be required before you become the new tenant. This is given in a formal document called a licence to assign.

3. Underleases. Rather than assigning its lease, the tenant may grant you an underlease. The tenant remains responsible to the landlord and you become responsible to the tenant. Your lawyer will negotiate the provisions in the underlease with the tenant's solicitors. The consent of the landlord will usually be required before an underletting takes place. This is given in a formal document called a licence to underlet.

4. The rights to assign a lease or to grant an underlease are referred to as the rights of alienation.

The basic terms can be illustrated by the following diagram:-

5. The term of the lease. Leases are granted for a fixed period of time, anything from 6 months to 25 years or more. This is the time during which you can occupy and use the property. The period specified in the lease is referred to as the term of the lease.

The Basic Provisions in the Lease
Whether you are being granted a new lease, taking an assignment of an existing lease or being granted an underlease, there are a number of basic provisions in the lease that you will need to discuss with your lawyer.

These are as follows:-

1. Rent and Rent Reviews
The rent that you will pay will have already been agreed. Rent is usually paid four times a year in advance on "the usual quarter days", namely 25th March, 24th June, 29th September and 25th December each year. You should discuss with your lawyer whether VAT is payable in addition to the basic rent. If you are unable fully to recover the VAT you pay, your lawyer may want to negotiate a removal of the landlord's right to charge VAT on the rent.

If the lease is for a term of more than five years, the landlord will have the right periodically to increase the rent. You should discuss the mechanism for reviewing the rent with your lawyer to ensure that it is fair and gives you full opportunity to negotiate the new rent with the landlord.

2. Use
A lease will contain restrictions on types of business that the property can be used for. You should discuss these with your lawyer to ensure that the restrictions do not conflict with your intended use of the property. For instance, a right to use the property as offices may not include a right to use the property for the provision of financial services. Your lawyer will also ensure that there is planning permission for the intended use.

3. Repairs
Your obligation to keep the property repaired will vary depending on the type of lease being granted. The following are the principal types of repairing obligations that appear in leases:-

3.1 Full repairing obligations
Full repairing obligations are usual where you are being granted a lease of a whole building. They impose an obligation on you to keep the whole of the property, including the structure, in good repair and condition and to redecorate the property internally and externally at regular intervals. Where the lease is of a newly constructed property, you should discuss with your lawyer whether you will have the right to recover damages from the developer, the builders and the other professionals involved in the construction of the property in the event that there is a major fault its construction.

The guide to available London offices to rent, Central London office space to let and for sale and serviced offices
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The London Office Guide is useful to help tenants find London office space to rent, London offices to let, central London offices to rent and both serviced offices and commercial property space. In addition to helping find London offices to rent and central London office space to let, it is useful for finding London serviced office space and business centres, London agent surveyors and information on the London office markets. Finding office space to let in London can be daunting. The right office space to rent in London is critical for many companies and if they don't find the right London office space to let their business and staff may be affected. Office space in London and London office property to rent can be expensive so companies need to shop around as much as possible. Overall, the London Office Guide is the most useful website and publication to help tenants find London office properties to let and central London commercial space. Especially office space in central London which includes City office space, Midtown offices and West End office space.

Included in the City of London are the postcodes EC1, EC2, EC3, and EC4. On the City fringe are London E1, London N1, London SE1, the southeastern part of London E2 and the southern part of London N7. London E14 includes office space to let in Canary Wharf and offices to rent in London Docklands. It is a separate office market but it competes for many of the same type of tenants the City does. Office space to let in London EC1 includes the areas of Clerkenwell, Smithfield and Farringdon which are east of Farringdon Road. Many media and hi-tech companies find these areas appealing. Offices to let in London EC2 include the areas around the Bank of England and Stock Exchange. Banks and financial companies of course prefer London office space in this postcode. Offices to rent in London EC3 include the area around Fenchurch Street and Eastcheap. Traditional home of insurance companies. Office space to let in London EC4 east of New Bridge Street include the areas around St. Paul's, Cannon Street and Blackfriars stations. London office space to rent is less expensive in the fringe postcodes. However, there is high quality London office space to let in London E1 around Spitalfields, Shoreditch and St. Katharine's. There is also new high quality offices to rent in London SE1 along the southbank and new office space to let in London N1 around King's Cross. There is also a range of inexpensive offices to rent around Angel and Old Street in London N1. Offices to let in London Docklands are mostly modern and the Canary Wharf office space to let is some of the best in all of Europe.

London Midtown is the area between the City and the West End. It is all of London WC1 and London WC2. It also contains London EC1 west of Farringdon Road and London EC4 west of New Bridge Street. Office space to let in London WC1 include offices to rent around Holborn and office space to let in Bloomsbury and also king's Cross. Offices to rent in London WC2 include Covent Garden office space to let and offices to rent around Leicester Square and the Strand. The Midtown office market is divided by Kingsway. Midtown office space to let east of Kingsway competes more with the City. Midtown offices to rent west of Kingsway tend to compete with the West End. Covent Garden offices to rent compete mostly with Soho office space while Bloomsbury offices for rent compete with office space in the West End north of Oxford Street.

The central or core West End of London office market comprises mainly London W1 office space to let. It also contains St James's offices to rent which is London SW1. London W1 offices to rent are in three geographical parts of the postcode. Mayfair, Soho and north of Oxford Street. Mayfair is the south west part of the London W1. Mayfair office space to let is some of the most expensive in the world. Soho is the south east part of London W1. Soho offices to rent have traditionally appealed to advertising and media companies. London W1 north of Oxford Street is divided into several office markets. There is office space to let in Noho which is immediately north of Soho. Soho office space to let is more expensive though. North of Noho are offices to rent in Fitzrovia which is the north east part of London W1. London W1 west of Portland Place is the remaining office market north of Oxford Street. It comprises mostly period office properties converted from residential.

The Greater West End of London includes offices to let in all of London NW1 and part of London NW8 to the north. To the south it includes almost all of London SW1, part of London SW8 and part of London SE11. To the south west all of London SW5, London SW6, London SW7, London SW10 and parts of London SW11, London SW15 and London SW18. To the west all of London W2, London W6, London W8, London W9, London W10, London W11, London W12 and London W14. Office space to let in London NW1 and London NW8 are offices to rent in Camden, Euston and Marylebone. Office space to let in London SW1 includes offices to rent in London Victoria, Belgravia, Millbank, Westminster, and Whitehall. In London SW8 and London SE11 are offices to let in Battersea and office space to rent in Vauxhall. In the south west there is office space to let in Chelsea, Fulham, Earls Court, Knightsbridge, South Kensington, Putney and Wandsworth. The office space to let in London SW11 also includes parts of Battersea. The Knightsbridge office space to let is expensive. Knightsbridge offices to rent compete with Mayfair. To the west there is office space to let in Paddington, Hammersmith, Bayswater, Kensington and West Kensington. There is Hammersmith office space to let in London W6 and Hammersmith offices to rent in London W12. London W14 office space to rent comprises mostly West Kensington.

In some cases serviced offices in central London or business centres in London might be more appropriate for some companies. London serviced office space is ideal for smaller companies. Serviced offices in London are usually available month to month and include furniture and services as well as the space. There is a range of London serviced office space available. From expensive prestige buildings to basic economical space. Before trying to find office space in London and especially central London office property to rent, tenants should refer to the London Office Guide.