Need advice about terminating a commercial lease early as the landlord.

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    Need advice about terminating a commercial lease early as the landlord.

    Hi

    I am new to being a commercial landlord and have been put in charge of managing a commercial property.

    The property in question is currently leased on a long term basis (for 18 additional years) to a restaurant.

    I am thinking of selling the property and it is likely that the land plot (rather than the actual building) would be of potential interest to developers to build a small block of flats.

    I have looked at the lease we signed 3 years ago with the restaurant tenant ((the lease contract is almost 60 pages long!) and it doesn't seem to say anything about penalties if the landlord terminates the lease early. To me this seems pretty unbelievable and unlikely.

    Is this a common occurrence or could I be misunderstanding the lease?

    Any advice much appreciated.




    #2
    You probably dont have the right to end the lease early, therefore it is a matter of negotiation to buy the lease back from your tenant. If you think about it a restauranteur needs to know he has the place for a reasonable number of years in order to spread the capital costs of fitting out

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      #3
      True. Thanks.

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        #4
        Depending on the lease the tenant may have the right to have a lease renewal in 18 years.
        Is the lease a Full Repairing an Insuring :lease and did you have a schedule of delapidations done before the new lease was signed.
        Does the lease have 3 yearly rent reviews. Was the new rent which was set at the start of the new lease done by a Commercial Chartered Surveyor.
        As its unlikely that you would be able to get the tenant out before the 18 years is up, what you could do is apply yourself for planning permission for change of use to flats, A Chartered Town Planner would probably give you free advice as to whether you would get permission.
        You should also consider selling the place with a Sitting Tenant. With interest rates at the moment being at an all time low I was approached by a somone who had a pension fund and they bought th place purely for the rental income which at present brings in 4 times more in rent than how much the money would fetch if invested in savings accounts.

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          #5
          Thanks for your feedback.

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