JCP Explains Commercial Leases for Pembrokeshire Businesses
JCP Solicitors provides expert legal advice and guidance to commercial clients across Pembrokeshire and beyond. Carys Wilson, a Director in the Commercial Property Team in west Wales, explains what both landlords and tenants ought to consider when arranging commercial leases.
- Lease Length and Break Clauses
When choosing to rent your property as a landlord, or to take out a new lease as a tenant, consider the length of the lease. It may be beneficial to discuss break clauses – an agreed date when you can opt out of the lease with appropriate notice – so as to add an element of flexibility for both parties. It is also important to think about whether the tenant will have security of tenure, meaning a right to stay at the property following the termination of the lease.
- Rental Costs
One of the most prudent decisions to make for the landlord and tenant is the rent price: how much the former sets, and for the latter, how much budget to attribute towards premises rental.
It is also vital to consider rent reviews and decide how this will be determined, agreeing whether rental increases would be made in line with the local market or in line with inflation rates.
- Repair Obligations
Will the tenant have a full repairing obligation, making them responsible for repairing the whole of the property? Or, will the landlord cover reasonable wear and tear? This agreement must be made clear in your contract. It may be worth including a ‘schedule of condition’ within the contract, which is a report that documents a property’s condition at the start of the lease.
- Subletting Options
When your Solicitor is drafting the rental contract, consider whether you will allow the tenant to transfer the lease and sublet the property. Your Solicitor can provide advice and guidance on the benefits and drawbacks on subletting agreements.
- Additional Costs
Consider whether there will be any additional costs for the tenant, i.e. payment of insurance premium, contribution towards maintenance costs of the communal areas such as a service charge.
- Required Documentation
Both the landlord and prospective tenant should be aware that the landlord has an obligation to provide an asbestos survey and an EPC. As a tenant, you can ask the landlord for these documents in advance.
It is also important to find out whether the landlord is VAT registered and has made an option to tax in relation to the property. If so, the landlord can charge VAT on annual rent and any service charge.
A Fellow of the Agricultural Law Association, Carys has extensive experience in advising on all aspects of commercial and agricultural property matters including landlord and tenant matters, securitisation, disposals, acquisition and general portfolio management. Living on a farm in Mydroilyn, and a fluent Welsh speaker, Carys brings a unique, firsthand understanding of the challenges and opportunities faced by farmers, landowners, and businesses in the locality.
Contact Carys by calling 01267 248883 or emailing carys.wilson@jcpsolicitors.co.uk.