There are two paths to letting business premises and in either case, it is imperative that business leases are professionally drawn or interpreted by experienced legal practitioners.
At Cross Ram & Co we can prepare such documents on behalf of landlords or advise tenants on their commitments and the limit of their responsibilities (but rarely can we act on both sides in the one transaction given the potential for conflict of interest).
- Short term: by Business Tenancy Agreement or Lease (there is a technical difference). These tend to be very much more complex than residential tenancy agreements and there can be far-reaching adverse consequences for the parties if they get it wrong! There is also the technical question of whether the lease is to be ‘contracted out’ of statutory secure of tenure provisions.Consequently, it is highly desirable that the documentation is prepared/examined by a solicitor.
- Longer term: Although a Business Tenancy can be a short term arrangement, usually between 1 – 3 years, leases are often granted for considerably longer periods as these provide both parties with certainty, important in business planning. Having said that, the trend in recent times has been for shorter leases providing greater tenant flexibility. We do advise landlords or prospective tenants to contact us at the earliest opportunity so that we may advise them of the practical implications of the proposals before getting too bogged down in the detail of documentation.
The rules re Stamp Duty Land Tax are especially complicated when looking at business leases. Most short leases, unless of an exceptionally high rent, avoid SDLT but the net present value still needs to be calculated and consideration given to any SDLT implications on any review of rent. Also, any lease for a period in excess of seven years is compulsorily registerable at the Land Registry, an additional layer of bureaucracy and cost.