Business Lease Question

[arcturus]

I am looking at leasing a small unit from a district council. Whilst the draft lease is yet to arrive, they have sent me a 'Form of notice that sections 24 to 28 of the landlord and tenant act are not to apply to a business tenancy'.

They are saying that if i commit to a lease:

1. I will have no right to stay in the premises when the lease ends.
2. Unless they offer me another lease I will have to leave the premises.
3. I cannot claim compensation for the loss of my business premises.
4. If they offer me another lease, I have no right to ask the court to fix the rent.

I am required to sign a declaration that all this is ok, having sought professional advice.

Are these exclusions normal? Should I be worried? I will take professional advice, but what do you guys think?

[Davel]

It's your decision but it means that they are keeping their options open come the end of the lease.

You no longer have the automatic right to negotiate a new tenancy and stay they unless they are happy to offer you a fresh lease.

Is it an area which might come ripe for re-development?

- as I understand it.

[arcturus]

The advice from my professional is that this notice is standard procedure for this district council and is nothing to worry about. They do it to everyone.

[Piglet]

The Council may well use excluded leases as standard. The question for you is not whether the procedure has been carried out properly but is whether an excluded lease is what suits you best.

I'm surprised that this is the first you've heard of it being an excluded lease, I would have thought that this is a valuation point and is something that would/should have driven how much you were prepared to pay for the lease?

My clients (shopping centres mainly) use excluded leases as a matter of course, the downside for you is that you have no right to stay after the expiry of the lease. This may be an issue if you need lots of kit in the building so your moving costs would be very high. It may also be an issue if your loctation is critical to your business. It may well be that the Council will happily offer you a new lease at the end of the term - that might depend on their plans for the area.

We're seeing a market that is very tenant friendly at the moment so if it is an issue for you all may not be lost.

[arcturus]

Thanks for the comments. It isn't an issue for us; i just wanted to check it wasn't unusual. There was nothing like this on the last premises we leased.

[johnnywb]

One way to get around this if it might be an issue (i don't know how long your lease is?) would be to simply ask for a longer lease with Tenant Only Options to Determine. (breaks). We recently did this for a tenant where our client specifically won't grant leases inside the Act, but were happy to grant them a longer lease instead.