I'm letting a shop -- should the lease be inside or outside the Act?

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    I'm letting a shop -- should the lease be inside or outside the Act?

    I am letting a shop unit and I am not sure whether I should push for the lease to be inside or outside the LTA 1954 (in other words, whether to give the tenant security of tenure or not). I had a few questions:
    • Are there any disadvantages to the landlord of a lease being outside the act? (I can't see any)
    • Is it more usual for shop tenancies to be inside the act? Would a tenant expect this? (I think the answer to this is "yes" but I am not sure)
    • Any other issues I might not have spotted?

    #2
    Outside of the Act gives you more flexibility but obviously less for the tenant, which may affect the rental value.

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      #3
      Definitely outside.

      Unlikely to be an issue in the rental discussion unless the prospective tenant is represented and even then I would challenge them to explain any impact with valuation figures. I've dealt with commercial property for decades, and haven't let a shop inside the Act for many years.

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        #4
        I agree probably not relevant to negotiations on the grant of a lease, but may be relevant on review. It may come down to the detail in the rent review provisions. If acting for a tenant taking a contracted out lease I would resist any provision which said that the fact that the lease was contracted out was to be ignored.

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          #5
          As I see it
          For a Landlord who may be an ordinary individual I believe Age should be considered. When I rented out my shop it was within the act, The lease I did was for 12 years. But 12 years later I was older, my circumstances had changed, and I wanted to sell. My tenant offered me a third less than what it was worth on the open market. Even though the lease was within the act the tenant had refused to do repairs under the full repairing lease amd I was successfully able to get possession and eventually sold.

          From a tenants perspective, if you have a lease within the act and you have observed the conditions of the lease, when it runs out you have the right to renew, also if you have built the business up you may want to Sell the Business as a Going Concern by way of lease assignment.
          Although that can be expensive as I had a shop tenant who wanted to sell his business, he found a buyer, then there were 3 solicitors involved, My solicitor who was dealing with the lease assignment and an indemnity from the outgoing tenant guaranteeing the rent of the new tenant.
          The solicitor for the proposed new tenant.
          The solicitor for the outgoing tenant
          All at £200 an hour. And it all fell through as my outgoing tenant was elderly and passed away before anything was sorted out.
          Good luck.

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