Commercial lease advice needed

[orangeLP400]

Hoping to rent out a small light industrial unit and the lease contract is giving me a headache.

I have managed to get some examples but they seem to be all legal gobbledygook.

And all are so different .There seems to be no standardisation.

One is 32 pages long and I do not understand a work of it and I have a degree in English.

Yes I can go to a solicitor but this is a small unit that does not justify the cost in many ways ( and yes I understand the consequences of a silly contract)

I did play out AI but I fear much of it is gibberish

My question is: If i was to write my own lease contract in plain English would it not be worth the paper it is written on? Does a contract have to be written in legalise

Or do some of the good and kind pistonheaders have a template I can use? Or who would be willing to give me some advice . DM is great.

[Johnniem]

OP, you do not make it clear if you are renting the unit out TO someone or FROM someone.

If you are renting out a unit you own to a tenant then get a solicitor. They will have standard forms of lease to start the process. Leases on commercial units include many things that protect the landlord, details the terms of the agreement and what each party is responsible for (repair, redecoration, reinstatement at the end of the lease term, whether it is inside or outside the Landlord and Tenant Act provisions - ie, do they automatically get a new lease once the first term ends etc etc etc).

I would strongly urge you to get a solicitor who has knowledge of property matters and particularly in commercial leases.

If you are going to lease the unit from someone else then, similarly, get a lawyer or a specialist commercial agency surveyor to advise you. You need to be aware of what your rights and responsibilities are.

Also, if you are taking a lease on a commercial property which is not new and has been previously occupied, please ensure that you get a chartered building surveyor to record a Schedule of Condition (to be appended to the lease) before you finalise the lease. This will limit your repair and redecoration obligations at the end of the lease.

If you are in the SE, feel free to DM me. I have been involved with this sort of thing for 40 years. I am a chartered building surveyor.

JM

[TwistingMyMelon]

Yes - are you renting to or from - as the comment above

Yes there can be "challengeing" leases - some are fairly straightforward

One of the best no nonsense options I have seen are "licences" instead of leases for smaller units with easy in/easy out.

Defo get a solicitor , unless you have a deep understanding of the pitfalls and common terms

[Venisonpie]

I'd lean more on a decent surveyor for the most part, they are more expert in the relevant legislation and will have commercial acumen. A solicitor knows legalese and needs to ensure the language is right but they're not always the sharpest commercially.

[Castrol for a knave]

You ideally need a Solicitor or Chartered Surveyor.

In short, the default law is the Landlord and Tenant Act 1954 ( plus a few others for added fun but this is the key one)

No matter what you draft it grants rights to a tenant effectively by default. You can agree a licence, which will sit outside the definition of a lease, but you get / give a max of 12 months occupancy and will not get exclusive occupation, be able to assign and no default right to extend.

[orangeLP400]

Thank you all for your replies. I own the building and want to sublet a separate portion of it which complicates matters.

I did state, " Hoping to rent out a small light industrial ..." so I am not sure why it was so confusing.

I understand the good advice from you all , of getting a solicitor involved, but I was reluctant to, as the rent may only be £500 pm with a year contract , and I fear the solicitors fee would not make financial sense, even though I just want the lease wording and I will do the paperwork.

No management of any kind is needed. I was quoted around £2000 for "drawing up a lease"

For someone who thinks AI is a short term gimmick ( and I am always right) I do see the benefit in this case but fear it may not be up to scratch for this.

Johnniem I am in York but would be great to talk to you.

[Johnniem]

OP, it seems like Castrol's licence suggestion might be the best for you, given that you want it for a year only and the rent is relatively low. Perhaps ask a local solicitor to provide a draft licence for you and then you can read the terms and conditions and make sure it is what you want. He/she will, quite rightly, charge a small fee but it will be worth it. Half an hour to explain what you want to do (take a plan of the building detailing the area you want to provide a licence for and photos of the property) and see what they come up with after you have explained what you need to cover.

Are you giving parking spaces or delivery access? Are you limiting the use of the space to whatever use class the building is registered for? You wont want a business that creates a lot of industrial processes and noise I presume? These are the things you need to think about. Maybe a chat with a local commercial property surveyor who deals with this stuff every day.

In short, it will need an expert eye, whichever way you choose to go as it may not be as simple as you might hope.

JM

[orangeLP400]

I did not know about a "license" for this but I may just fit the bill so thank you Castrol and Johnniem.

I have done a lot of work re the outline of the building, parking on property etc so I think I am aware of most of the aspects that need to be covered, but perhaps not all.

Again, thank you.

[Castrol for a knave]

As Johnnie says, get a lawyer just to look over everything.

The Law Society should do template leases and licences you can use

Easy to think you have drafted a licence, only to find your licensee is actually a tenancy and has rights of tenure i.e. they fall under the 54 Act.

Edited by Castrol for a knave on Thursday 30th July 21:46

[Steve H]

orangeLP400 said:

I did state, " Hoping to rent out a small light industrial ..." so I am not sure why it was so confusing.

Exactly why using a lawyer comes in handy as that phrase could be understood either way.

£2k is a bit meaty for a standard lease though, especially one at a relatively low rent and short duration. I had one done for a 10 year lease not long ago which cost significantly less even with a rent deposit deed, and the new tenant paid the legal cost which may be worth considering as well.

[Panamax]

orangeLP400 said:

I own the building and want to sublet a separate portion of it which complicates matters.

Please get a solicitor. The sentence you have written there shows a lack of understanding.

If you own the building (freehold) you would be "letting" a part of it.

If you are renting the building you would be "sub-letting" a part of it, something that would almost certainly need to to be specifically permitted in your lease or specially approved by your landlord.

It's vital to get the wording right, not just regarding the floor-space but also repair obligations, utility supplies, parking etc etc. Then there's the question of lease term and whether your tenant will have security of tenure.

[Dixy]

I own small units that I rent to others and have been doing so for over 30 years.
I use a standard law society lease that I got from somewhere.
None of it is worth a damn.
If you get a rouge Tennant they will ignore everything that does not suit them including what the courts say and it will just cost you.
Be up front with any prospective tenant and tell them in words of one syllable what they can and can not do.
Keep on top of it from day 1 and deal with anything that crops up as and when it happens.
99.9 are good and if you are unlucky put your head between your legs and kiss your arse good by.
Lawyers and surveyors will be your best friend because they need to have their snout in your troff. They do not guarantee anything.

[OIC]

There are a lot of commercial properties 'rented' or 'leased' with just a verbal agreement.

How you do yours depends on many things including the rent, property value and your appetite for risk.

There's nothing better than having a well written lease agreement in place.

Plus good insurance, including cover for legal fees and loss of rent.

I always go for full repairing and insurance leases with tenant negotiations handled by an agent.

Start off with a heads of terms discussion.

[98elise]

Steve H said:

orangeLP400 said:

I did state, " Hoping to rent out a small light industrial ..." so I am not sure why it was so confusing.

Exactly why using a lawyer comes in handy as that phrase could be understood either way.

Exactly what I thought. The OP thinks its unambiguous, but it could be read both ways.

[orangeLP400]

AI Overview
To "rent out" something means you are the owner. You let another person use your property, car, or item for a set period of time in exchange for regular money payments. You act as the landlord or provider in the deal.

Quora
+1

I thought that what I said may be ambiguous to others on here as I spent most of my life outside the UK, with different versions of English being spoken, and I am somewhat dyslexic, but this is what AI said for what its worth.

But I am thankyou for all the posts as it has put some perspective on the matter and made me re-consider a solicitor or a company that regularly deals with this sort of this. I phoned both today so your comments have been taken on board.

Again, thank you for your responses.

[Steve H]

The point about the “rent out” phrase is that you absolutely are not wrong, but it wouldn’t be unreasonable for someone to think something different. Misunderstandings are always best avoided early on.

Hope it all sorts how you want it to

[Wacky Racer]

98elise said:

Steve H said:

orangeLP400 said:

I did state, " Hoping to rent out a small light industrial ..." so I am not sure why it was so confusing.

Exactly why using a lawyer comes in handy as that phrase could be understood either way.

Exactly what I thought. The OP thinks its unambiguous, but it could be read both ways.

My thoughts:-

"I want to rent out" = You own the property, and want to rent it to someone.

"I want to rent" = You want to rent a property somebody else owns


However, with anything legal, I suppose it's always better to word things so that there is definitely no doubt.

[98elise]

Wacky Racer said:

98elise said:

Steve H said:

orangeLP400 said:

I did state, " Hoping to rent out a small light industrial ..." so I am not sure why it was so confusing.

Exactly why using a lawyer comes in handy as that phrase could be understood either way.

Exactly what I thought. The OP thinks its unambiguous, but it could be read both ways.

My thoughts:-

"I want to rent out" = You own the property, and want to rent it to someone.

"I want to rent" = You want to rent a property somebody else owns


However, with anything legal, I suppose it's always better to word things so that there is definitely no doubt.

I would agree its correct from a technical point of view, but it can be read both ways from a perception point of view.

This is why we have solicitors, which ironically often makes things even harder to read

[His Lordship]

Did you get anywhere with this?
I currently rent a small industrial unit (i.e. I am the tenant!) - I'm just about to re-sign for another 3 year term, I'd be happy to forward you a copy of my commercial lease agreement for you to use as a basis.

It was drafted by a full commercial letting agent, not just a one-off or one-man-band, so should be fairly good to go.

[orangeLP400]

That would help a lot! And I appreciate your offer. Please DM me.