Legal Costs for Commercial Lease Renewal

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    Legal Costs for Commercial Lease Renewal

    I am a freeholder, can anyone tell me the rough legal costs to draft a prepare a Lease Renewal?

    Additionally is this typically paid by the tenant renewing?

    There is in point of fact an Act of Parliament covering this very issue aptly named The Cost of Leases Act (1958) which says ..

    Notwithstanding any custom to the contrary, a party to a lease shall, unless the parties thereto agree otherwise in writing, be under no obligation to pay the whole or any part of any other party’s solicitor’s costs of the lease.

    It is difficult to put a figure on what costs might be, as costs are a function of how much amendment and re-amendment and argument over clauses inclusion/deletion and what's more the amount of the annual rent and the term are factors which can be taken into account in a solcitor's reckoning of costs, because the higher the value of the lease (rent multiplied by years) the higher can be a negligence claim made against them.

    Having said that, on relatively low value leases, which I would say includes anything up to about twenty thousand pounds a year, you could probably manage using the Law Society Preprinted Leases, which are generally accepted to be more favourable to tenants than a lease prepared by a landlords' solicitor and have all clauses standardised. There are two basic versions, one for a letting that is part of a building, and one for a whole building, ie without common parts and lettings to others.
    With these preprinted leases, your legal costs will be very approximately nil as you just fill in the blanks and get the tenant to "sign here"

    Purists will say that they water down tenant's liability and there is some truth in that but in 95% of cases the question is has the tenant paid the rent, and not the subtle differences between a clause that requires the repairing liability to extend to "rebuild as necessary", which in any event is pretty harsh in the modern world of much shorter leases. Whereas in our parents time a lease would be for twenty or twenty five years the average is now down to as little as five or seven years.


      A lot can be said for pre-printed template leases but not all suitable for saying in polite company. The snag with preprinted freely available template leases is that you really do have to know what you are doing when completing the blank spaces or inserting any new requirements or deleting any of the preprinted ones.

      A factor to bear in in mind is that on renewal the tenant is entitled to renew on broadly the same terms and conditions as in the existing lease (other than rent, term, etc) so a preprinted lease might not be suitable.

      The Law Society's preprinted leases are not the only ones. Others here:

      On actual costs involved I've no idea: I don't involve myself in client costs of that nature. Whether the tenant should pay or how much depends upon what is agreed. Costs of Leases Act 1958 (possibly one of the shortest Acts of Parliament in existence) doesn't state that the tenant cannot pay costs, only that costs cannot be imposed (which means the COL overrides any requirement in the existing lease for the tenant to pay costs when the existing lease itself is renewed.

      Having said that if the lease renewal follows a court order or acceptance of a Part 36 offer then that order or Part 36 might require the tenant to pay some or all of the costs.

      The Model Commercial Lease family consists of various commercial leases for use in England and Wales. They are available for anyone to use without charge.


        If you are a landlord of Commercial Premises and have a lease due for renewal you should find out if the lease is outside the Landlord and Tenant Act as one day you may wish to bring the lease to an end and sell the property and if you have a tenant who has the right to have a lease renewed you will not be able to sell the property at the higher figure, i.e with vacant possession.


          Always Problems,

          With respect, your conclusion is too simplistic. Often, commercial property let on a tenancy having renewal rights will fetch a higher price than if with vacant possession.


            If your renewing on the same terms as before, on a lease previously draw up for say a six yr term. Would it be ok to copy and use the exsisting lease, if a new rent is agreed add that in also. There would be no need for legal cost at both ends ?


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