Legal Costs for Commercial Lease Renewal

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

    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?

    #2
    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.

    Comment


      #3
      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: http://modelcommerciallease.co.uk


      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.

      Comment


        #4
        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.

        Comment


          #5
          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.

          Comment


            #6
            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 ?

            Comment

            Latest Activity

            Collapse

            • Is a flat conversion above shop a good option?
              midlandslandlord
              I'm after some comments on a possible conversion of a flat above a business

              The property is in a parade of shops in a former village community on the outskirts of town in a small parade of shops. Most are long established local businesses - ours in a hairdresser where the T has been there...
              23-08-2019, 02:28 AM
            • Reply to Is a flat conversion above shop a good option?
              desamax
              Why look for further investments when you have something in hand that can be converted for far less than buying a unit to let....
              25-08-2019, 18:48 PM
            • Reply to Is a flat conversion above shop a good option?
              doobrey
              The yield sounds very healthy and mixed use is generally tax efficient, so seems like a good idea.
              24-08-2019, 10:16 AM
            • TOGC and VAT
              doobrey
              I am looking quite seriously at buying a commercial property, which would be my first one. It is elected for VAT so it would be critical to structure the purchase such that VAT was not payable on the purchase price.

              As such my understanding is that it must be done as a Transfer Of a Going...
              24-08-2019, 08:31 AM
            • Quick turnaround lease
              ladybreaker
              Hello there, In the past I have had drafted lease for all my commercial property but something new has been pointed out to me that if the tenancy if below seven years A quick turn around lease can be use, its quick and cheaper. I asked this to my usual solicitors and never herd about it I try to make...
              23-08-2019, 20:04 PM
            • Reply to Quick turnaround lease
              Lawcruncher
              I think the RICS has a model form of lease for small retail premises. The reference to seven years probably refers to the fact that leases for over seven years need to be registered. One-size-fits-all leases are probably adequate for the majority of cases where the term is short and the premises are...
              23-08-2019, 22:07 PM
            • Reply to Is a flat conversion above shop a good option?
              desamax
              Is there a market for 1 beds in the village, you could convert and sell the flat leasehold, this could give you a lump sum up front. But if your looking at BTLs and there is a strong chance of letting the Upper for 4K + pa you won’t get a better yield than the conversion cost....
              23-08-2019, 16:07 PM
            • garage lease
              hsa1
              Hi All,

              What is the average ball park figure for a lease length for a garage in London. it has its own title deed. If the lease is around 20 years remaining. is it as simple as applying for a lease extension , or can the freeholder withhold?

              thank you
              18-08-2019, 13:22 PM
            • Reply to garage lease
              hsa1
              After the lease ends the freeholder may not wish to extend it and if so it will become their property? if for arguments sake the lease is 20 years remaining (unsure what the average is for a garage) and I have yet to purchase the garage, is it best to agree on extension before purchase?

              ...
              18-08-2019, 21:43 PM
            • Reply to garage lease
              AndrewDod
              You have no statutory rights here at all (it is not a residential property). So it is matter of asking for a price and agreeing that, if you get agreement, otherwise there is nil you can do. In 20 years it will case to be your lease controlled garage....
              18-08-2019, 17:34 PM
            Working...
            X