Change of landlord

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  • Change of landlord

    Hi,
    I am 6 years into a ten year lease, for my shop. My landlord is about to sell the property and I'm waiting for the day to come when somebody walks through my door and says something like "Hello, I'm your new landlord"

    When this day arrives what should I expect to see from the new landlord regarding the transfer of my lease, payment of rent etc. Is there anything else the old or new landlord should provide me with?

    Thanks Jay

  • #2
    You should receive a letter of authority from your current landlords solicitors with the details of who you pay the rent to and from what date. Any rent you've already paid for the period will be transferred to the new owner in a completion statement.

    Your new landlords will also charge you insurance (assuming you pay it) at the inception of the new ownership. Your old landlords should refund you the share from completion until the renewal date.
    [I]The opinions I give are simply my opinions and interpretations of what I have learnt, in numerous years as a property professional, I would not rely upon them without consulting with a paid advisor and providing them with all the relevant facts[I]

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    • #3
      Thank you for your reply. The landlord takes care of the building insurance, so I have nothing to worry about there.

      This "Letter of authority", will it be a "simple" letter that I can understand or will it be in legal jargon that I will have to show to a solicitor to check out? What happens if I don't receive this letter?

      Thanks Jay

      Comment


      • #4
        It will be in plain English, will be words to the effect.. Dear Mr Jay70, On whatever date 2013 Mr A Landlord sold his interest in 123 your street, your town, please make all future rent payments to :- New Landlord/Agent, New address, New contact details.

        If you're on good speaking terms with your current landlord, to put your mind at rest you could contact him to confirm.
        [I]The opinions I give are simply my opinions and interpretations of what I have learnt, in numerous years as a property professional, I would not rely upon them without consulting with a paid advisor and providing them with all the relevant facts[I]

        Comment


        • #5
          Excellent, thank you very much. It sounds very simple and easy.

          Is there anything else, important, I need to be aware of when there's a change of landlords?

          Comment


          • #6
            FAO Jay 70. The following is an extract from my 2005 newsletter, an article I wrote for tenants entitled "What's in it for you?"

            “Over the past few years, demand for shop property investment has rocketed: auction rooms packed, yields at record lows. Almost daily, another shopping centre, a portfolio changes hands, pass-the-parcel, in landlord paradise. But, despite all talk about property being the thing to invest in, hardly a word is uttered about the consequences for the tenant in having a new landlord. So what’s in it for you?

            It would be nice to say nothing, but it’s worse than that. The experience begins with the total price the new landlord pays for the investment because that determines net yield and attitude. Some landlords are scared so will agree anything to keep a tenant happy but many are greedy, out for whatever they can get and that applies especially to buyers of centres and portfolios whose only real interest is money. Forget ‘property performance’, tenant dancing to the landlord’s tune: the buzzword is making assets ‘sweat’; squeezing the last drop out of the tenant at every opportunity, by increasing the rent and/or requiring payment and/or restructuring the lease. So what else is new?

            The building insurance premium will likely go up. Not only the amount of cover but also premium because the new landlord does not have the same clout with the insurer: checking nothing untoward is vital but a hassle. Also, because the new landlord is likely to insure from exchange of contracts, the old landlord canceling on completion, the tenant having paid the premium to the old landlord has to pay the new landlord for another year and recover overpayment from the old landlord. Since many landlords can’t be bothered, or become untraceable and many insurers do not refund the whole of the overpayment for cancelled policies, the tenant can be out of pocket.

            Next, the idea the rent must be too low so at review the proposal is at stratospheric level. Whether rent should be so much greater depends upon the integrity of evidence and provisions of the lease but tenants can be doubly stressed by the landlord’s sheer indifference to affordability. More accustomed to dealing with the general public than landlords, preference amongst retailers to be fair and reasonable does not cut ice: to quote Reed Personnel Services plc v American Express Ltd 1996 "not good for the tenant to say what is good for the landlord." A tenant thinks subjectively, concerned about profitability of the business and future plans and imagines the landlord similarly caring. The landlord is not; the landlord is immune to tenant bleating and whereas a landlord cannot be criticised for sticking to the objectivity of tenancy law, an uncompromising stance does nothing for an ongoing relationship.

            As for existing discussions and negotiations, letters to lawyers, calls to agents unanswered, nobody on the landlord’s side able to make decisions, everything on hold through no fault of your own is immensely frustrating. And when contact is resumed, how should a tenant communicate with a landlord whose only interest in the property and lease is how much can be made out of the tenant? The answer is to change your attitude, use silence and remember business tenancy law and valuation work both ways and the tenant is often in a stronger position.

            Fundamentally, yield is commensurate with prospects for capital growth. When a low yield is a reflection of investment demand, in effect, the investor has overpaid but instead of accepting the market for what it has become takes it out on the tenant. The need for revenge can be sweet or impossible to deal with but it’s not your fault so never take it personally but use the opportunity to side-step what is expected.

            Landlords dislike not being ‘in the know’ so like as much information as possible about their tenants and their intentions to prepare for eventualities. The easy way to find out is to be blessed with a talkative tenant, the manipulative to court surveyors with instructions and, in the public domain, to read announcements and accounts.

            So, assuming sweating symptomatic of a landlord uncomfortable with high risk, the less the landlord knows about your business and your intentions the better for you. Other than politeness, it’s not compulsory to be particularly forthcoming, especially since anything you say is bound to be used against you, so avoid chit-chat and be secretive and careful in whom you confide: even if not commercially sensitive, the slightest remark will determine attitude and can be misconstrued.”

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