Tenants in the current climate really should be taking the advantage

Tenants in the current climate really should be taking the advantage that commonly sits with the landlord and using it to their own ends.  Of course, if they don’t have the competence in lease negotiations, they should speak to an expert.

Commercial leases are usually drafted by the solicitor representing the landlord and so there is an irresistible opportunity to include clauses and scenarios calculated to derive benefit for their client. 

The tenant comes along with one priority in mind – to find and get into some space suitable for his/her business.  Landlord’s agents are not slow to take advantage of this haphazard approach.  They allow lack of time and lack of a clearly defined plan to funnel the tenant towards the outcome that has been predestined for the tenant.  As every day goes by, the manoeuvring room and negotiating position of the tenant reduces.

By the time the agreement is passed to the solicitor chosen to represent the tenants’ “best interests”, the initiative to change major terms or to introduce new terms has substantially evaporated and the tenants solicitor has to choose their words carefully for the shortcomings of what has been agreed knowing that with the right property advice early enough things could have been different.

Take for example the rent review.  How many tenants appreciate that the overwhelming majority of rent reviews are written so that the rent can only increase or stay the same?  The current climate is seeing new rents reduce, or incentives introduced to contrive the same.  A well advised tenant negotiating at the outset, before the lease is agreed, will seek a rent review that is truly “to the open market rent” but it is essential that this is done sufficiently in advance of any agreed document, that the landlord is not assured of his “upward only” clause surviving into the lease.

Why does this matter?  Well, do you want to find yourself in the position of giving more of your profit to your landlord than you get to keep for yourself?