10 Top Tips for Occupiers when Renegotiating Leases
If you are a commercial occupier and your current lease is about to come to an end there is a lot to consider. If you are intending to re-negotiate then it is very important to get things right; you will be tied in to this new agreement for a set period of time and making the wrong decisions now could have serious implications in the future.
We have put together our 10 top tips to help you renegotiate your lease effectively:
- Engage with your owner early and find out what their future intentions are. It may well be that they have plans, for example, for redevelopment which would force your hand in terms of a possible relocation.
- Engage with your owner early to let them know that you wish to consider staying whilst pointing out that you have other options on the table. In nearly all cases it is better to get these discussions underway sooner rather than later. You need to avoid a owner’s tactic to soft-pedal on negotiations until much closer to the date upon which notice has to be served. This will limit your manoeuvrability and reduce the opportunity to negotiate terms effectively.
- Do your research. Even if on balance you prefer to stay where you are, an informed decision can only realistically be made with a full understanding of the issues and what other potential options might be available.
- Check if your current lease is inside the security of tenure and compensation provisions of the Owner & Occupier Act 1954 Part II. This is best checked with your lawyers although a good surveyor will also be able to help. Again, this could have a significant impact upon your ability to negotiate when discussions with the owner starts in earnest.
- Do not be afraid to go out and look properly at other options. Even if your instinct is to remain where you are, your view might be changed by seeing what else is on offer. Find out what other owners are prepared to concede; they will not, however, reveal their best terms unless and until you have taken the trouble to go and look at their buildings. Make your current owner aware that you are looking seriously at alternative premises; they will also have good connections in the local property community and will quickly find out if you are bluffing!
- Benchmark your current lease terms. Consider not only the level of rent but also take this opportunity to review the rates and service charges that you are currently paying.
- Be prepared to raise other building matters which may have become issues during the period of your occupation. If, for example, the reception and WCs are now looking a little tired, make the case to the owner to upgrade as part of the package to encourage you to stay.
- Think ahead and have contingencies in place. Negotiations do not always run smoothly and it is important that leave yourself with a ‘Plan B’ to minimise the risk of exposing the business to sudden disruption or an unforeseen hike in property costs. Set clear timescales and be prepared to walk away if the owner drags their feet.
- Whilst any renegotiated lease is likely to be on substantially the same legal terms, be prepared to question particular clauses and seek to get these refined or renegotiated in your favour. The new lease document does not have to slavishly follow the old text, although some updating is inevitably required in order to meet changes in commercial practice and legislation since the original lease was agreed.
- If you are in a multi-occupiered building where key lease dates might align, find out what your neighbours are doing. Be prepared to collaborate if necessary as collective bargaining with the owner can be a good way of getting the best possible deal for all the occupiers. Do not allow the owner to ‘divide and conquer’.
If you are starting to think about your next lease and would like some assistance in negotiations or finding another property, contact our property experts. With the knowledge of property combined with experienced insight into the market, we can assist you in getting the best lease for your needs.
Contact us today on 0118 959 6144 to find out more.