Signing a Lease
The implications of committing to a lease are greater than just the rent. Tenants should consider these before signing up.
Service Charge is often a sensitive issue. Landlords want to maintain maximum flexibility in what they might want to charge in years to come. Tenants will want to restrict expenditure where there is little perceived benefit to them.
Rent on longer leases will usually be subject to rent review.
When setting a budget it is easy at the start of a lease to forget the potential final costs. Understanding the tenant’s repair obligations and what work must be done at the end of the lease before the lease is signed is vital. Landlords want to ensure that the costs involved in letting the property next time round are paid by the outgoing tenant as far as this is possible. This will usually be done by serving a Schedule of Dilapidations towards the end or shortly after the lease has ended.
Tenants keen to reduce the size of this claim can only do this with any certainty by ensuring the lease wording limits the amount the Landlord can claim. We can advise on how this can be done to greatest effect. Tenants should consider the use of a Schedule of Condition and carefully consider the terms of any Licence for alterations.
Stamp Duty Land Tax has been in existence since 2004 and is still a cause of uncertainty. The structure of a deal can sometimes reduce or postpone payment of tax. Tenants must also be aware that where there is a rent review during the lease, further tax might be payable after this time.
Tenants will be expected to pay for insurance for both the building and also for loss of up to three years rent.