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NEW EDITION OF LAW SOCIETY BUSINESS LEASE – 2008
The Law Society have produced 2 standard business leases (one for the whole of a property and one for part of a property) since 1991 which are aimed at:
‘the small businessmen who, when incurring all the expenses of setting up their businesses or expanding and taking on new premises, frequently find that they are, in addition, faced with having to pay not only their own solicitors costs but those of the landlord’.
They have recently produced a new version (third edition) in order to comply with the Code for Leasing Business Premises in England and Wales which was launched in March 2007.
What is the Law Society Business Lease – I didn’t know about the old version!
When can the Law Society Business Lease be used?
The Law Society Business Leases are generally geared for medium term lettings of up to 10 years in length and will fall between the other 2 categories of lease:
Short Term Leases for between 2 – 5 years – these are generally ‘contracted out’ leases i.e. where the landlord has taken away the tenants statutory right to renew the lease at the end of the term; andLong Term Leases – 10 – 15 years and above – these are known as ‘institutional leases’ and will cater for every eventuality and will be for the benefit of an ‘institutional landlord’ (i.e. large investment landlord such as a pension company) or will be sold to such a landlord.
What is the advantage of using the Law Society Business Lease?
The aim of the Law Society Business Lease is to be fair to both landlord and tenant.
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For example:
Repair - in relation to ‘repairing’ obligations, which are often a source of disagreement, the Law Society Business Lease obliges the tenant to ‘maintain the state and condition’ of the property rather than obliging the tenant to ‘fully repair’. The ‘maintaining’ obligation will not oblige the tenant to deal with any repair existing at the date of the lease;
Rent Review – in the new version of Law Society Business Lease in relation to rent review there are now 2 options: either an index linked rent review which is simple and will not lead to any argument about what is the market rent or a traditional upwards only rent review based on market rent;
Assignment (i.e. transfer/sale) – the previous version of the Law Society Business Lease allowed assignment subject to the landlord specifying conditions which were not unreasonable. A common condition was often to agree to an assignment but only if the transferring tenant guaranteed the performance of the new tenant. Landlords will routinely ask for this guarantee. However in the new version this guarantee can only be asked for if the new tenant is of a lower financial status.
For more information – contact Matthew Neiland at Bradley and Jefferies Commercial Solicitors on 01332 221722
