Financial & Legal News

INSIGHT: Are You A Business Partner And Are You Sure You’ll Be Able To Renew Your Lease?

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Some SMEs make the mistake of assuming that their right to remain in their business premises at the end of a lease is protected by the Landlord and Tenant Act 1954 (LTA 1954).  However, a recent Court of Appeal decision provides clear direction on this and serves as a reminder that a new tenancy pursuant to this Act is not always automatic.

In this case, the Court was bound by the decision in Jacobs v Chaudhuri [1968] 2 QB 470 which ruled that both tenants must join in any application for a new tenancy under the Landlord and Tenant Act 1954 (LTA 1954) unless there was an exception which is permitted by statute.

It’s an issue that could affect many businesses across various sectors as the structure of a company can change significantly during the course of the term of a lease.

“The key to avoiding this situation, and the many other complex issues that can affect a company’s ability to stay in its leased premises, is to prepare well in advance,” says Karen Piontek.

“Companies should start planning at least 12 months ahead of the end of their lease to ensure that they have recognised and addressed any potential pitfalls so that they are able to negotiate favourable terms going forward.”

A key element of that planning is to take expert legal advice from a commercial property specialist and this should form part of an ongoing relationship throughout the term of a lease so that any break options can also be considered carefully and where appropriate, tackled efficiently within the strict deadlines.

While some companies see commercial property legal advice as an unnecessary expense before taking a new lease or when a lease is due to end, many of our clients stay in contact with us so that we can review their options regularly and they can seek advice as and when it is required. This puts them in a much better position to secure favourable terms when the time comes to renew or relocate.

Of course, renewal is not always the best or only option and, early, expert advice from a solicitor that knows your business and its goals, can help to establish your property strategy and negotiate a favourable outcome.

So whether you’re concerned about the implications of changing your business structure and the impact this may have on a lease or you simply want to ensure that you don’t fall foul of onerous tenancy terms, it is always better to prevent an issue and carefully plan a company’s operational framework rather than incurring significant costs in putting things right after the event.

For further information on commercial property contact us on Tel: 0161 785 3500 or email enquiries@pearsonlegal.co.uk

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.

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