advice on 135% rent increase? help!

Discussion in 'General Business Forum' started by jake34, Apr 10, 2008.

  1. jake34

    jake34 UKBF Newcomer Free Member

    Posts: 2 Likes: 0
    hi,

    need some advice please?

    i have a friend who took over a family business on the death of the
    business owner (his uncle)the immediate family had their own professions and
    and had no interest in taking over the business, as my friend was in the same
    line of work as his uncle, they offered it to my friend- to take over, or they would close it down in within the week.

    after some thought, he took the business over, changed its name to a limited company.
    new vat number, all new equipment/stock- started from scratch.
    he pays the family a good rent for the premises which they own.

    to start with the business was not doing very well(he has the books to prove it) but over the course of 10 years he has worked extremely hard and built the business up and it is now doing alright.

    he has treated himself with a new car and few things, rewards for his
    hard work (60 plus hours a week..ect) now the family have approached
    him 10 years later with copy's of the last few years business accounts (turnover) and have started to claim rights to the business, it was their fathers business and they want more out of it....they propose to increase the rent by 135% a week! and if he does not agree to this they want him out within a month as the have someone else in place to manage the company on their behalf.

    my friends name is on the directors of the company.
    as i understand -he has no proper written lease
    as the family would not agree to give him one. which was a mistake
    on his part. it was all handshakes and verbal agreement's.
    rent has been paid on time each and
    every week by cheque for the last 10 years.

    there's been several rent increases over the years
    which he has nether questioned and just paid. has also paid for all the running repairs
    and maintenance to the building and grounds. they have contributed nothing
    and nether really got involved.... until now.. he appears to be doing well
    for himself.

    he's arranged a charterd surveyor to assess the rental income .
    he really does not want to move from the premises and relocate especially if they intend to carry his business on under a new management.

    his worried they will just get him out by changing the locks one morning
    and just tell him... your out!

    sorry its abit long winded, but any advice or information on his legal postion tennant rights would be very much appreciated...........................

    cheers

    jake..
    Posted: Apr 10, 2008 By: jake34 Member since: Apr 10, 2008
    #1
  2. wevet

    wevet UKBF Newcomer Free Member

    Posts: 911 Likes: 170
    Is wholly business premises or is there a residential component like a flat above which is part of the deal?
    Posted: Apr 11, 2008 By: wevet Member since: Mar 7, 2008
    #2
  3. Conceptstore

    Conceptstore UKBF Newcomer Free Member

    Posts: 96 Likes: 5
    Thats a a tough one. They must give appropriate notice of increasing rent but that is usually stated in the lease. If there was no written agreement then that really throws everything in the air as there are no specific clauses. It should also take them a few months to apply for an eviction order (tenancy law not sure about commercial properties) but likeswise, no written lease makes it unclear. For the property, your friend should speak to a property lawyer to see what his rights are, he may have a leg to stand on.

    With regards to the business, if he has made many changes over the years including turning it into an LTD company then his name should be recognised as the registered owner as well as the owner of all equipment (if he paid for it). Try and figure out how many of the company assets he owns eg.

    - Equipment - who paid for it?
    - Logo - Did he have a new logo designed. If so who were the rights transferred to?
    - Company name - Whose name is it in?

    Your friend can get a new property if needs be but the business name is something he has built up so try and hold onto it as it seems your friend has every right to. Make sure everything is put down on paper and seek legal advice.

    Good Luck
    Posted: Apr 11, 2008 By: Conceptstore Member since: Jan 9, 2007
    #3
    • Thanks Thanks x 1
  4. lesliedocherty

    lesliedocherty UKBF Ace Free Member

    Posts: 1,621 Likes: 215
    The legal guys will sort you out, but going by what you have said, he shold be well protected, as for the lease, you never know he might find a better suited unit that suits the business more. (the good thing with no lease is he is not liable for any dilapidations, this can in itself criple you )

    They could be bluffing as for chucking him out, its not a good market place to be putting properties on the market.

    SPeak to your lawyer and play hardball, i think thats the onlt language these people understand, but look for another property and see whats on offer, you might even save money.
    Posted: Apr 11, 2008 By: lesliedocherty Member since: Jun 17, 2006
    #4
    • Thanks Thanks x 1
  5. jake34

    jake34 UKBF Newcomer Free Member

    Posts: 2 Likes: 0
    thanks for the replies

    the premises are only commercial no flats or dwellings

    all the eupitment has been purchased by him
    transport/machinery ect (he owns outright)

    on the death of his uncle the previous company
    ceased trading as far as the inland revenue were
    concerned and all stock was sold off a new limited company was set up
    with him as director.

    maybe the family should have requested he buy the business
    from them and rent the premises, but as it was unexpected
    that his uncle passed away, the family ran it with the
    existing staff for about a month, then offered it to him to take over
    or they would close it down at the end of the week.

    its a very tricky one, as there all family and quite close.
    i think looking at alternative premises is a must but moving
    a business such as his can be risky. we no he needs to find out
    his legal position from a solicitor.

    thanks for the advice, will pass it on.

    cheers

    Jake
    Posted: Apr 11, 2008 By: jake34 Member since: Apr 10, 2008
    #5
  6. gregs2769

    gregs2769 UKBF Newcomer Free Member

    Posts: 380 Likes: 31
    hes in a stickey one! as far as a lease he shuldn't have to worry about that as paying them a certain amount for 10 years should be seen as an agreement of tenacy in the eyes of the law. Also the family has no right to take a slice from the pie its his bussiness as he is the director and owns all the stock. But needless to say hes gonna have to speak to some lawers........its gonna cost him some big money to sort it out...


    DONT MIX FAMILY AND BUSSINESS...... i lernt that the hard way
    Posted: Apr 11, 2008 By: gregs2769 Member since: Sep 24, 2007
    #6
  7. Dr Mark Vaughan

    Dr Mark Vaughan UKBF Newcomer Free Member

    Posts: 2 Likes: 0
    I think you need to look up the 1965 act which refers to rent on commercial premises. As far as I am aware under your circumstances since you have a business established for more than 6 months, and no other lease terms, you have 'right of tenure'. You are in effect like a siting tenant. The rent rise itself will probably need to go to tribunal. This is not my expertise, but discussions with profesionals on a simular case lead me to this understanding.

    Regs Mark:)
    Posted: May 12, 2008 By: Dr Mark Vaughan Member since: May 12, 2008
    #7
  8. mobyme

    mobyme UKBF Newcomer Free Member

    Posts: 2,559 Likes: 759
    I would concur with the previous poster that your friend has a right of tenure given the period of his tenancy and given the attitude of his uncles family there couldn't be a better time than right now to get this sorted once and for all. Your friend should contact his solicitor and leave him to deal with the family.
    Posted: May 12, 2008 By: mobyme Member since: Jan 12, 2004
    #8
  9. Dr Mark Vaughan

    Dr Mark Vaughan UKBF Newcomer Free Member

    Posts: 2 Likes: 0
    Think I got the date wrong LTA act was 1954, not 65 oops.
    Regs Mark
    Posted: May 12, 2008 By: Dr Mark Vaughan Member since: May 12, 2008
    #9
  10. amanda1111

    amanda1111 UKBF Newcomer Free Member

    Posts: 111 Likes: 13
    I used to work in property management for a long time and have drawn up many a commerical lease in my time...my understanding is that if there is no lease then you have absolutely no legal right to be there. They could change the locks tomorrow and put all your stuff into storage and if they wanted to charge you for it. I'm sure it wont come to that though. You may be classed as a sitting tenant and I have dealt with a few of them in my time...its a tricky area. We have had sitting tenants who ignore all rent increases, refuse entry and just be plain awkward about the whole thing because they have rights. I would seriously take some legal advice and soon
    Posted: May 13, 2008 By: amanda1111 Member since: Apr 27, 2008
    #10