Lease Extension

[IqbalShaddie]

Hi,
I need some advice about the rules regarding a commercial retail unit peppercorn lease that I am thinking about purchasing. The lease is a 99 year lease with about 55 years remaining. Its a small unit in a built up residential area which compromises of flats, the unit also comes with a large parcel of land adjacent to it.

Can someone explain to me what the uk (England) law states with regards to renewing or extending the lease as it is a commercial property? From what I understand from the current owner, is that the landlord does not reply to requests for a lease extension... is he within his/her rights to do so? Everything is done via email via an agent.

Are there any property acts that cover this situation? Say for instance I purchase the property and use it for 25 years and can't renew or extend.... what happens if I get to the end of the term????

If anyone could advise with appropriate guidance I would be mighty grateful. Thanks

 

[Scalloway]

What does your solicitor say?

 

[rach88]

As it is a commercial lease, you have no statutory right to a lease extension.

 

[Chris Ashdown]

Your lease will mention all your rights and obligations

 

[IqbalShaddie]

As it is a commercial lease, you have no statutory right to a lease extension.

Okay, thank you this is what I was looking for, is there anything regarding statutory rights RE obtaining a response from the landlord if a request for lease extension has been made?

Also, what would happens at the end of the term of the lease? Does everything go back to the landlord/freeholder?

Your lease will mention all your rights and obligations

Thanks, I've looked through the lease and hoping to go through it all with a solicitor next week. Just trying to do my homework first.

 

[fisicx]

Also, what would happens at the end of the term of the lease? Does everything go back to the landlord/freeholder?

Yes.

All you are paying for is permission to use the property. It means you can’t alter the structure of the property or any of the facilities without permission. The lease agreement may also require you to return the property to its original condition. In return the landlord has a number of obligations to you which may include repairs, fire prevention and security. It’s all detailed in the lease.

 

[rach88]

Okay, thank you this is what I was looking for, is there anything regarding statutory rights RE obtaining a response from the landlord if a request for lease extension has been made?

No. The landlord does not have to respond.

Also, what would happens at the end of the term of the lease? Does everything go back to the landlord/freeholder?

At the end of the term you would have the same rights as any other commercial tenant - that is, not many. If the lease is not contracted out of the Landlord and Tenant Act 1954 then you would have a right to renew but crucially any renewal would be at a full market rent. And in any case the landlord could oppose renewal on the grounds that he wanted the building back for his own occupation or to redevelop.

This is assuming the law is still the same in 55 years of course - who knows.

But essentially you are buying a depreciating asset. That can be ok - leaseholds have their place - but you need to adjust the price you are willing to pay accordingly. And be conscious that if/when you come to sell the lease on, there will be even fewer years remaining on the lease and this is something your purchaser will want to take into account. It is also unlikely that you will be able to get a mortgage secured against a leasehold interest with only 55 years unexpired.