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Friday, October 5, 2018

Tenants: Don’t lose your rights – seek professional advice before it’s too late

By Louise McElarney (London)

It’s so simple. As a tenant, you have rights. Know these rights and exercise them – because not doing so could cost you dearly.

At Avison Young, we advise on both sides of the coin – for landlords and for tenants - and will always seek the best deal possible for our client in each case.

The U.K. lease advisory team at Avison Young, which operates nationally, recently acted for a landlord client on a lease renewal in the Midlands. As the tenant failed to serve a formal notice – in order to protect the tenant’s right to a new lease when the original lease expired – the landlord was able to secure a new tenancy agreement and, therefore, pocket an extra £250,000 over the length of the lease. Of course, that meant the tenant in question was now out of pocket to that tune.

The tenant lost its negotiating position through not exercising its right to a new lease. If the tenant no longer wanted to occupy the premises, that would have been absolutely fine. However, the tenant was over a barrel, so to speak. It was crucial for the tenant to stay put. As a furnishing company using a large warehouse, it did not want to leave. Therefore, when the landlord raised the rent, the tenant had no choice but to accept the terms. If the tenant had planned early and exercised its right to a new lease and sought professional advice, it could have negotiated a better deal.

Property costs are still the largest outlay for businesses after staff costs. Taking on or dismissing a staff member is a decision not taken lightly, and this should always be the case for your property requirements. It is advisable to diarise important dates in a lease contract and seek guidance early from a professional who can advise on the rights of both the landlord and tenant to avoid sticky situations – and ultimately, improve your firm’s bottom line.

(Louise McElarney is Director, Lease Advisory in Avison Young’s London West End office, specializing in landlord and tenant representation in the industrial/logistics sector.)

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