My Lease Is About To End. What Action Do I Need to Take?
Preparing a strategy before renewing a lease.
- Breakclauses
The current market still gives tenants great scope for negotiating a breakclause or breakclauses with their Landlord in the renewal lease.
- Rent Review
If your existing Lease contains rent review provisions, that review is likely to be upwards only. However, there is case law which does support a tenant's claim for an upwards/downwards rent review on renewal, particularly where your existing tenancy has no rent review provisions. Furthermore, the new Code of Practice on Commercial Leases recently published, exhorts landlords to 'offer alternatives to upward only rent reviews priced on a risk adjusted basis'.
In practice, Landlords will strongly resist a claim for an upwards and downwards rent review. But such a claim may well enable you to negotiate a breakclause or breakclauses in the renewal Lease.
What if I want to end my 1954 Act protected lease?
- The 1954 Act, as now amended, allows a Tenant to determine his tenancy at the end of the contractual term either by giving the Landlord at least three months notice or by simply vacating before the end of the term. This will be the case even if a Section 25 or Section 26 Notice has been served and even if you have made an application to the court for a new tenancy.
- If you are still in occupation of your premises after the end of the contractual term, you can determine your tenancy at any time by giving your landlord three months notice.
What if my Lease is excluded from the 1954 Act?
If your Lease is excluded from the 1954 Act your Lease will automatically come to an end on the last day of the contractual term. So, if you want to stay in occupation you will have to agree terms with your landlord well in advance of the end of the term either by signing a new Lease or entering into an Agreement for Lease.
If you are not confident your Landlord will agree satisfactory terms with you then you should start negotiating for alternative accommodation well in advance of the end of your Lease. The more advanced those negotiations are for alternative accommodation, the more genuine pressure you will be able to apply on your existing Landlord to agree satisfactory terms for a renewal of your existing accommodation.
What if I want to bring my existing Lease to an end by exercising a breakclause
If you decide to bring your Lease to an end by exercising a breakclause in your existing lease your Notice of Determination should follow the exact wording of the breakclause. In addition, if your breakclause requires conditions to be complied you must ensure that you have precisely complied with all those conditions set out in the clause by the dates specified in the clause, otherwise you may find your notice is invalid.
Conclusion
Whatever your circumstances, do seek good legal advice whenever you are planning to move particularly, now that the procedures have changed with the substantial amendments to the 1954 Act. Prevention is better than cure! Remember that lawyers always make more money out of litigation when problems arise than advising you how to avoid those problems!
Whether you decide to remain in your existing premises or move, those tenants who prepare their strategy well in advance of the end of their Lease will reap rewards particularly in the tenant's market which still currently prevails.
Different considerations apply depending on whether your existing Lease is within the Landlord and Tenant Act 1954 ('the 1954 Act') or outside the 1954 Act. Now that the 1954 Act has been amended, particular care needs to be taken.
What if my Lease is within the 1954 Act ?
A lease within the 1954 Act can continue after the end of the contractual term unless the Landlord brings it to an end by serving a Section 25 Notice to Determine or the tenant brings it to an end by serving a Section 26 Request for a New Tenancy. Both notices must give not more than twelve nor less than six months notice and expire no earlier than the end of the contractual term.
- If your premises are under-rented at the end of the term and you are confident that the landlord has no redevelopment plans for the premises and no other grounds for opposing renewal, it may well suit you to wait for the landlord to serve his Section 25 Notice. The landlord cannot increase your rent until he serves a Section 25 Notice on you. Service of that Notice will then enable the landlord to increase your rent six months after the date of his Notice by means of an interim rent application even if his Section 25 Notice specifies a later date for termination.
- If your premises are over-rented, you, as tenant, can take the initiative and bring the tenancy to an end at the end of the contractual term by serving a Section 26 Request requesting a new tenancy.
- Whichever notice is served, to fully protect your position under the 1954 Act, you will also have to make an application to the court for a new tenancy before the date of termination specified in the landlord’s Section 25 Notice or your Section 26 Request. Under the 1954 Act, as now amended, you can now agree in writing with your landlord to extend the time by which your application to the court can be made.
- Having fully protected your position, you are still free to look around for cheaper or better accommodation whilst continuing the negotiations with your Landlord. The new Woolf Reforms to the 1954 Act court procedures do mean that the court processes are likely to move faster than they used to. But there is still scope for a tenant to 'buy time' whilst alternative accommodation is considered and, possibly, negotiated in tandem with your existing Lease renewal negotiations.
If my premises are over rented, is there any other way I can reduce my rent?
Whether the Landlord has served a Section 25 Notice or you have served a Section 26 Request, under the 1954 Act, as now amended, you will be able to apply for an interim rent from a date six months after the Landlord serves his notice or you serve yours.
What issues should I negotiate on renewal of my 1954 Act Protected Lease?
The terms of most renewal leases will often follow the form of your existing Lease. But the three critical areas you will have most scope for arguing will be in relation to the following:-
- Rent
The landlord is only entitled to a market rent on renewal, disregarding any effect on rent of improvements that you have carried out to the premises during the previous 21 years. The rent is assessed at the date of the court hearing. So, if your Lease renewal negotiations are pitching into a period where rents are rising then the sooner you can reach agreement with your Landlord or get the matter to court the better.
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.
