Commercial Property

I have just read the September Commercial Development Activity for September 2010 and, that coupled with comments made by one of my golfing partners at the weekend to the effect that there are more redundancies coming from residential developers, has deepened my pessimism.

If the market is as bad as it seems I do wonder why more tenants, when looking for commercial premises are not driving harder bargains.  This is an issue that we Commercial Lawyers have gone on about for a number of years but it is worth another airing.

Commercial tenants, even quite large companies, seem to go into the market without proper protection.  Some seem to accept what the letting agent tells them.  The point to bear in mind is that the letting agent is not acting for the prospective tenant but is employed by the landlord to get the best delay.

Some tenants will negotiate to get a rent review but do not think of the other issues. Here are some points that also need to be considered:

1. Why are you taking on a full repairing lease particularly of an old building on a short lease? What happens if you have to meet a major expenditure? Will you ever recoup the money spent?

2. Why are you taking a lease for 21 years? Why not have greater flexibility?

3. Why is the rent review upwards only?  That can mean that even if the rent is right now at review you will be paying too much rent, which means that if you want to move you will find it difficult

4. Why are you paying the landlord’s legal cost? He is lucky to have you interested; he should probably be paying you.

I could blog on for pages about this but I am sure the point is made.

So what is the solution?

The best method is that before you agree the terms discuss them with a commercial agent that you instruct, just to make sure that what you are being told is a good deal. The agent can just point you in the right direction.

You can go back and renegotiate. That is the cheapest course or you can instruct the agent to act on your behalf. The likely cost you will incur in his fees will probably be nothing to the savings you will make over the term of the lease

The Supreme Court has ruled that, for the purposes of succession, a Council flat tenancy held by a tolerated trespasser can be revived.

The case involved a trespasser of a flat who was tolerated, not a tenant!

He had lost a secure tenancy when the Court granted a Possession Order against him.  The Landlord Council, the London Borough of Southwark, argued there was no tenancy to which anyone could succeed.

However, the tolerated trespasser, unfortunately, was terminally ill.  His brother moved into the Council flat to look after him.

The brother, Barry Austin, resisted attempts by the Council to evict him.  He lost in the lower Courts and the Court of Appeal.  However, the Court of Appeal ruled that where a former tenant died as a tolerated trespasser, the person seeking to succeed to the tenancy could apply to the County Court to postpone the date for possession.

If the application was successful, the tenancy could then be revived!

Of course, in practical terms, this is not the end of the matter but an unfortunate situation for Council Landlords and, nevertheless, remains a complex area of the law for tenants!