Contracted IN Business lease, now they want to negotiate OUT

[Wozy68]

I started a thread a few months ago about the leaseholders wanting me to go Contracted out,

After reading the replies on here, the Management company and I had a good chat and I explained I wanted to stay Contracted in, and they accepted this, and were going to fit a new roof on the building and raise the rent by 11% (fixed for three years) which I was happy with.

I received an email the other day and the Management company wish to now meet with me to re-negotiate the lease and it seems basically try and get me to go contracted out as there as been a 'revision of what the leaseholders wish to do' with the industrial site.... and the roof will not now be done it seems this year.

I have not signed any paperwork and as of yet, I have no idea really what this means, though I doubt its for housing any time soon for example.

Any idea what I should I do? I have a lot of investment in the building (I'm a furniture maker) and like the comfort of a Contracted in lease. I've now been told that two of them are now turning up to 'negotiate'.

Problem for me is that I'm a woodworker, not a negotiator, plus have no real idea how to proceed.

HELP.

Many thanks in advance

[singlecoil]

Unless they are planning to negotiate by making you an offer that you can't refuse I suggest you wait and see what offer they make. Evidently they want to alter the terms of your lease and they will need your consent to do that.

So wait and see what their offer is, you can always refuse it. Unless you can't (do you own a horse?).

[Googie]

Protected tenancy gives a Statutory right of renewal in addition to compensation rights in certain cases in the event of the landlord opposing a renewal which can only be done on certain grounds such as redevelopment. If you contract out you will have no automatic right of renewal at lease expiry and will be over a barrel from a negotiating point of view. There is no compensation right on an excluded tenancy

Suggest you see what they are prepared to offer up but you are under no obligation to surrender your Protected rights

Do you have a sublease or does the managing agent represent the owner ie the freeholder?

Compensation based on 1 or 2 times rateable value depending on how long you have occupied plus buggeration factor.

[Wozy68]

Thanks for the replies so far.

There is no sub lease. Our lease is direct with the Trustees of the IND Estate and the management Co are dealing on their behalf.

[PurpleMoonlight]

When is you current lease until?

If the landlord wants to occupy or redevelop then they can likely object to a new lease when the current term is reached.

I understand that the compensation of being evicted is an amount equivalent to the rateable value of the property. So that is the minimum you should be looking for now.

Also, if you effect a new 'out' lease try to negotiate a 3 or 6 month break clause for you. This will give you greater flexibility to find a new home.

[Wozy68]

PurpleMoonlight said:

When is you current lease until?

If the landlord wants to occupy or redevelop then they can likely object to a new lease when the current term is reached.

I understand that the compensation of being evicted is an amount equivalent to the rateable value of the property. So that is the minimum you should be looking for now.

Also, if you effect a new 'out' lease try to negotiate a 3 or 6 month break clause for you. This will give you greater flexibility to find a new home.

The lease ran out March 2015. ....... So as such out of lease now, though I'm still paying for it. This has mainly been caused due to them accepting staying contracting in and then on more than one occasion sending out docs that were stating contracted out and/or replacing the roof and then not including it.

[Googie]

Ok so you are holding over under a statutory tenancy- the LL needs to give a minimum of 6 months notice to determine that. This requires service of a S25 Notice which will either offer new terms for a new lease or oppose the grant of a new tenancy . If they oppose this requires a court order. Depending on the grounds of opposition this is likely to give rise to a compensation payment based on 1 or 2 times rateable value.

Who is responsible for repair of roof under the existing lease- you or the LL

[Wozy68]

We have to make sure the building is wind and water tight only, however this is becoming impossible as the roof has gone brittle (white asbestos) due to age ....., the building is around 70 years old. So roof is basically getting towards end of life.

Edited by Wozy68 on Wednesday 6th July 10:27

[Googie]

So that's the most favourable repair covenant but see your problem. I think you need to meet them and try negotiate the works to the roof which are presumably reflected in the increased rent , all as part of a renewed lease inside the Act. They are going to leverage the position on the roof against you I am afraid. If you were to concede the point go for as long a term as possible with Tenant only breaks on a regular basis . They should also as a minimum pay you the compensation that you would be due under a protected tenancy as part of any deal if you surrender the protected tenancy

[Wozy68]

Googie said:

So that's the most favourable repair covenant but see your problem. I think you need to meet them and try negotiate the works to the roof which are presumably reflected in the increased rent , all as part of a renewed lease inside the Act. They are going to leverage the position on the roof against you I am afraid. If you were to concede the point go for as long a term as possible with Tenant only breaks on a regular basis . They should also as a minimum pay you the compensation that you would be due under a protected tenancy as part of any deal if you surrender the protected tenancy

Thank you for your replies. It is most apreciated.

Just to confuse things, the lease is actually in my Fathers name, who started the LTD company up many years ago, not in mine (he is still the MD of the co though retired). If I go contracted out, would it be better I asked to move this over to me?

Lastly, if its going to cost them to alter it, I assume my father would directly benefit rather than the company, which obviously is fine by me.

[Googie]

No problem - this does confuse and complicate things and stretches my knowledge and I think you might need some formal legal advice which this is not! To be subject to the Act there has to be a tenancy and occupation for the purpose of a buisiness so you are okay on these tests. From what you say the lease is not in the company name which would be preferable. What I don't know is whether your father has to remain tenant although gut feeling is that he does. A way around this might to to assign the lease now but I don't know if this can be done given that the contractual term has expired .

You need to be careful here that you don't prejudice the right of renewal which currently sits with the tenant which is not the company.

[Wozy68]

Googie said:

No problem - this does confuse and complicate things and stretches my knowledge and I think you might need some formal legal advice which this is not! To be subject to the Act there has to be a tenancy and occupation for the purpose of a buisiness so you are okay on these tests. From what you say the lease is not in the company name which would be preferable. What I don't know is whether your father has to remain tenant although gut feeling is that he does. A way around this might to to assign the lease now but I don't know if this can be done given that the contractual term has expired .

You need to be careful here that you don't prejudice the right of renewal which currently sits with the tenant which is not the company.

Thanks

It seems that at this time at least he's best to stay on the lease not to confuse the issue .

[Googie]

Best to keep it as is and look to transfer lease after renewal in place- just check that you have a right of assignment in the existing lease- should be with LLs consent not to be unreasobly wiitheld

[PurpleMoonlight]

Who is actually paying the rent?

Your father or the Ltd?

[Wozy68]

PurpleMoonlight said:

Who is actually paying the rent?

Your father or the Ltd?

The Ltd

[PurpleMoonlight]

Wozy68 said:

The Ltd

Could make life interesting.

Assuming the landlord knows this, the Ltd will have occupancy rights.

[Wozy68]

PurpleMoonlight said:

Could make life interesting.

Assuming the landlord knows this, the Ltd will have occupancy rights.

It's paid DD from the company bank acc monthly.

Occupancy rights? What does that actually mean

[PurpleMoonlight]

The right to occupy the property by the acceptance of rent!

You need to talk to a lawyer regarding this to ascertain the rights of your father and the Ltd before you negotiate relinquishing those rights.

[4x4Tyke]

I don't consider myself a negotiator either, however I've learnt to handle this without to much anguish with the following personal rules.

- Prepare, create a list of pros and cons for each position.
- Establish in your own mind your ideal situation, this as a minimum should be opening 'bid'. Also consider asking for more than your really want so you can conceed things.
- Establish in your own mind your fall back, minimum position.
- Prepare notes and make contemporary note of discussion, cross off or tick your items as agreed.
- Listen carefully to their offer, look out for qualified phrases showing uncertainty and rhetoric (stock responses) that they haven't really been thought through.
- Question them about each element of the offer; don't just accept that you and they mean the same by some expression or phrase.
- Find their core motivation, is it something that can be dealt with by an alternative acceptable to you. Consider if there is anything you could do that make that alternative more attractive or remove some barrier. In your case e.g accept another (superior) unit on the same estate and an fully expensed move.
- Don't be intimidated by silent pauses, try to use these to your advantage, use a stock response like "And ?"
- Don't be intimidated by two of them. Chances are one of those will be the decision maker and often it will not be the one doing the most talking.
- If they deadline, remember this is their deadline, not yours. In general you have no obligation to complete a renegotiation to change your position by their deadline unless it aligns with your interests.
- Agree to nothing on the day, always have them confirm their last and final offer in writing, read it, sleep on it, even if it seems to be all your wanted, keep your eye open for a pitfalls.

[Wozy68]

Thanks for the replies, infact I can't thank you enough.