Commercial lease renewal

jjimjam

How does a commercial lease renewal work from landlord's perspective?   I inherited a commercial property a year or so ago and the lease is ending soon.   After talking to a surveyor and solicitor it was recommended that I renew the lease.   I actually don't fully understand why I can't just continue with the existing one.   Rent is about 50k/year.   Surveyor is charging 10% of year's rent to inspect property and propose new terms negotiate with tenant.   Solicitor is estimating fee of between 25% and 50% of a years rent to do lots of things, including drawing up the new lease.  I think the variation is because of a possible court case.   Both are warning about a court case and setting out their fees for that eventuality.    I'm sort of happy with how things are already.  The rent is low perhaps, but the fees don't warrant potential increase.   Does this all sound normal?        

anselld

Unless the landlord and tenant have agreed to exclude the Landlord and Tenant Act 1954, leases will automatically continue if the tenant does not leave.  The fees for renewal do seem expensive.  The least two I did (10 year leases) were less than £2500.

What Court case are they worried about.  Have you been threatened with Court action or are they just trying to justify their fees?

jjimjam

I believe it is all under Landlord and Tenant Act.   
What are the pros and cons of simply letting it run.      Can I continue the rent reviews?   Can tenant leave whenever they want?   Can landlord end tenancy whenever he wants?  Or would this be covered by details of the lease?

There is no sign at all of disagreement.    Tenant is fine.   I want them to stay and continue paying rent.   Perhaps a rent increase is due now.

The court case stuff is a warning for situation where terms cannot be agreed.   I have no appetite to go there.   But still the fee estimates feel high without court case.

anselld

I think it is three months notice either way once the lease is "holding over".

Same terms apply so for example if the original lease is rent reviews every three years then that continues.

"Perhaps rent increase is due" is a bit vague.. It is either due because a rent review is due or because you want to negotiate a new Lease.

The main benefit of a new Lease is certainty of tenure for both parties.  Up to you how much you value that.  The surveyor should also have the knowledge to ensure you are getting the correct market rent which you sound unsure of.  They might actually earn their 10% fee with that negotiation!