Complex Lease Terms

A Henry Stewart Master Class

It’s not just drafting – it’s negotiation AND drafting.  Where you start affects where you end up and the Heads of Terms set the tone.  Do not concede value unnecessarily but equally don’t lose an opportunity because you don’t know what’s possible.

Remember: lease negotiation is complex – there are many pitfalls.  This one-day briefing will ensure that it is not you who is out of touch with what’s happening in the commercial property market.

Now read on:   

Advances in technology (think the impact on the high street from online shopping), economic uncertainty and the growth of serviced offices and pop-up occupiers can impact the commercial property market and norms in lease negotiations.  Lease terms must adjust to reflect the realities of business – who has the stronger hand – landlord or tenant?  The fluctuations in the bargaining position of the parties can be an outcome of supply and demand, industry codes and guidelines as well as legislation and case law.

This one-day briefing covers the latest thinking and trends in lease terms – what is being negotiated, what is being drafted, what is being agreed and what is being rejected.

This Master Class is for owners, occupiers, surveyors/agents, funders active in the current market and their legal advisers.  The Course Directors – Roger Woolley, Partner and Head of Real Estate and Development, Claire Long, Associate, Real Estate Development, and Lana Farrell, Associate, Real Estate Development Team at Lester Aldridge LLP, with Simon Wainwright, Managing Director, JPW Real Estate – will take a practical look at the latest trends including:

What the agents and their principals should sort out before passing the agreed terms to solicitors 

• Ensuring the Heads of Terms are detailed enough
• Key points to consider adding to Heads of Terms which can make a difference to lease negotiations right at the outset
• What should and should not be included and detailed in the Heads of Terms
• What can be done to minimise the potential problems later down the line

 Update in relation to the Lease Code
 
The length of leases 

• What is acceptable and what is not in the current market
• Striking the right balance from both the landlord and the tenant’s perspectives
• How to adopt the right negotiating position, being mindful of what each party in the negotiation is seeking to achieve
• Impact of shorter lease terms on both landlord and tenant including a focus on the repairing liability and Schedules of Condition and Service Charge provisions

 Occupational Sharing provisions 

• Group sharing
• Concessionaires and Franchisees

 Current trends in relation to rent free periods 

Security of tenure 

• To exclude or not to exclude
• Options to renew? Particularly where complex rent review or lease terms are involved

Break clauses (mutual or tenant only) 

• What is likely, what is possible and what is realistic?
• Latest trends in Break Clauses
• Conditionality in Break Clauses
• Impact of the Lease Code

Rent review clauses 

• Open market review verses RPI/CPI review
• Other ways to vary rent
• Possible future trends
• Tailoring the review provisions to reflect use (e.g. care homes, hotels and licensed premises – properties with non-standard users)

 Rights to assign and underlet 

• Restrictions; what is usual in the current market?

 Service Charges 

• Update in relation to the Service Charge Code
• Service Charge Caps

Uninsured Damage 

• Impact of agreeing / not agreeing to Uninsured Damage Provisions
• Striking the balance between landlords and tenants

Tenant fit outs, rights to alter and obligations to reinstate
 
Energy efficiency standards compliance 

• Minimum Energy Efficiency Standards (MEES) post 1 April 2018 and MEES clauses in leases – what is and is not being included?

 How the lease terms and the identity of the tenant affects investment values