Lease contract - maintenance rent

[scribe0101]

Hi all,

Looking over a lease contract given to me, nothing worries me too much apart from a part about maintenance rent.

It basically says that maintenance rent is payable by the tenant at the rate of £150 per month subject to clause 5.7.

5.7 reads: "The Maintenance Rent shall be such sum as is fixed by the landlord from time to time."

Now, translating that into layman's terms, I'm pretty sure that states "The landlord can increase the maintenance rent whenever they please", no checks or balances, or statement that an increase should be reasonable (whatever that may be defined as) accompanies this clause.

Is such an open clause normal?

Probably going to get the contract reviewed by a solicitor, but thought I'd seek peoples experience here as well.

Cheers

Chris

 

[kulture]

definately get it checked by a solicitor

 

[deniser]

Hi all,

Looking over a lease contract given to me, nothing worries me too much apart from a part about maintenance rent.

It basically says that maintenance rent is payable by the tenant at the rate of £150 per month subject to clause 5.7.

5.7 reads: "The Maintenance Rent shall be such sum as is fixed by the landlord from time to time."

Now, translating that into layman's terms, I'm pretty sure that states "The landlord can increase the maintenance rent whenever they please", no checks or balances, or statement that an increase should be reasonable (whatever that may be defined as) accompanies this clause.

Is such an open clause normal?

Probably going to get the contract reviewed by a solicitor, but thought I'd seek peoples experience here as well.

Cheers

Chris

No. This kind of clause is not normal. It's a bit difficult to answer without reading the lease but I assume this is some kind of service charge contribution. Is the Maintenance Rent a monthly payment towards the actual service charge with a balancing exercise done at the end of the year - like a payment on account - or is it a fixed amount regardless of the amount of service charge?

 

[Deleted member 59730]

It is perfectly normal but there are a few things to negotiate. It should never be increased beyond the current Index of building maintenance costs and you should have that included as a minimum. Or, in the case of the landlord charging it at costs plus an admin charge you just have to trust it is fair.

 

[deniser]

It is perfectly normal .

What is not normal about it is the fact that the landlord has the ability to set the level at what he wants without having to be reasonable or relate it to anything.

The collection of maintenance rent itself is perfectly normal.

 

[scribe0101]

Thanks for you replies.

@deniser - Yes, this is the only service charge applicable to the lease. There is no balancing exercise mentioned.

Both - Agreed, I have no problem with a maintenance rent, it's just the lack of any control over an increase or the number of them. Now, this is for an industrial unit on an estate where they don't come up often, even though the lease is actually quite flexible (I can break the lease every 12 months without penalty), so I assume the other tenants are happy or they would just leave and units would be constantly available. That said I don't want to take any chances.

I've contacted a solicitor today to get the contract reviewed and also see about including the return condition of the unit to be in line with a Schedule of Condition.

Thanks again.

 

[scribe0101]

Just thought I'd update the thread.

I did have the lease reviewed inline with the heads of heads of terms that I was also sent, and as I suspected the maintenance rent clause was the one highlighted for most concern, along with pretty much all the other points I had raised an eyebrow at.

My solicitor advised on a number of ways to mitigate the maintenance rent clause, but given the lease is only 3 years with a break option every 12 months, it was suggested that it is much simpler get any increase subject to an annual cap (as opposed to an accounting and balancing exercise every 12 months). I am happy with that.

The maintenance rent is roughly £100 per month +VAT (I misquoted it in my original post), so I think I'm going to suggest a cap of 20% per year.

Does anyone else have a lease with with such a cap on a maintenance rent/charge increase, and what is it (if you don't mind me asking)?

20% is a figure I plucked out of the air. Obviously 5% would be better, but I don't want to be so restrictive that the landlord refuses such an addition to the clause, but nor do I want to give too much away. Perhaps I should in the first instance offer 15% and then offer the rest if they refuse. Anyway, I guess that's something only I can decide how to approach

Cheers

Chris