Why do I have to repair the property even though it was in an awful state when I took it on?
It is likely that you have signed a “full repairing lease”, which means that you are fully liable for the repair and condition of the property. If you agree to a lease like this, then it is irrelevant how bad a condition the property is in at the outset. A term in the lease to “keep in repair” means that it has to be in repair in the first place, and therefore it is down to you as the tenant. This can be avoided by getting a Schedule of Condition at the outset, so that you don’t have to put the property back into any better state of repair than it is when you took it on. Alternatively, you could sign an “internal repairing lease” so that the landlord is responsible for the exterior and structure of the building, but he is still likely to charge for the repairs via a service charge.
How can I recoup all the costs of repairs via the service charge if my tenants have different obligations in their leases?
You can’t. The service charge provisions will be set out in the lease, and these will specify what each tenant contributes to, and the percentage of their contribution. If items are not covered in the service charge clause then you will not be able to recover these costs from the tenants. The shortfall in the cost of the works will have to be met by yourself as landlord. In future you will need to ensure that a lease is drafted to cover all the possible elements.
What is a “contracted out” lease?
This is a lease that does not benefit from the provisions of the Landlord and Tenant Act 1954, so you do not have “security of tenure.” At the end of the lease, if it is contracted out you have no rights to renew, and the landlord has the right to the property back when the lease expires. This doesn’t stop you negotiating a new lease, but if the landlord doesn’t agree to the rent, or wants the property back to relet to someone else, there is nothing to stop him. A lease which has not been contracted out gives you automatic rights of renewal, and you are in a much stronger bargaining position.
I have a rent review and my landlord says he is going to increase the rent. Do I have to accept it?
No you don’t (in the majority of cases). Unless it is a fixed increase provided for in your lease, there should be a rent review clause which details how the rent can be calculated. Usually this will be by reference to open market rent; ie what would a “hypothetical tenant” pay if the unit was empty. A rent review surveyor is the best person to negotiate this for you, as they have experience in researching and analysing rents and terms of leases. Whilst it is unlikely that your rent will go down as most leases have an “upwards only rent review clause”, a good surveyor should be able to reduce the amount of increase the landlord was proposing, saving you money.
What happens if I don’t reply to a rent review notice from my landlord; could the rent increase by default?
There are some leases which have a default in the rent review clause, so that the rent will be fixed at a certain level if you don’t comply with the conditions specified. This may be replying within a certain timescale, so always seek advice as soon as you receive a rent review notice.
What do I have to do to operate my break clause?
This will depend on the conditions set out in your lease, where the break clause will usually specify what needs to be done. However these conditions have to be complied with exactly, otherwise you may find that the break notice is deemed invalid. If you are thinking of exercising your break option seek advice as soon as possible.
If I try and negotiate my rent won’t the landlord evict me?
You are perfectly within your rights to negotiate your rent both at rent review and lease renewal (subject to specific lease conditions). If you have a rent review then the landlord cannot evict you, and the lease will specify how the rent is to be calculated (ie with reference to comparable rents, turnover, RPI etc). There will usually also be a provision to refer the matter to an arbitrator or Independent Expert if the parties cannot agree.
If your lease is about to expire, and the lease is protected under the 54 Act (see above) then the rent must be negotiated. If the rent or other terms of the lease cannot be agreed then it can be agreed by the court, and the provision for this is set out in the 1954 Act. The landlord cannot just evict you.
If however your lease is “contracted out” and you cannot reach agreement on the lease, you have less of a bargaining position. The landlord could evict you after the lease has ended if terms cannot be agreed. Whilst this is unlikely, it is always best to start negotiating early in this situation to try and agree terms before the lease expiry.
What is “Zone A”?
Zone A is the first 20ft depth of a shop (with some exceptions), measuring back from the shop window/frontage. This is considered to be the most valuable part of the shop. 20ft times the width (and deducting any areas such as stairs and columns which are not sales space) gives you the Zone A area. It is used to calculate a rental £Zone A rate which allows you to compare properties with different sizes and layouts.