With the economic recession still gripping the country some parts of the region have plenty available commercial property up for let, often at very reasonable rents.
Landlords are keen to fill their properties and many find that prospective tenants drive a good bargain on the rent and other terms. Often tenants want flexible terms and short lettings whilst they try their hand at a new venture. In these types of situations it is easy to skip issuing a lease to save on the cost of having one prepared. But is this a good idea? The answer is no.
Leases protect both the tenant and the landlord. They set out the rent that must be paid, allow landlords to review the rent at regular intervals and charge interest on late paid rent. They set out the fixed term for the lease giving tenants security of occupation should their business being to flourish and give the landlords the security of knowing their tenant is contractually committed to your unit.
Landlords can specify what business activities are to take place at the premises which can be good if a landlord occupies a nearby unit (you don’t want your tenant competing against you by running a similar or the same type of business to yours) if you own a few units in a street. Changing the use of the premises requires the landlord’s permission, as does subletting the premises to someone else.
If your tenant is going to want to stay in your premises for a longer period, your lease can specify who is to carry out repairs at the premises and when a tenant comes to leave, you can make sure the building is left in a good state of repair and condition making it easier to let out again to a new tenant.
The main problem with having no lease in place is the state of mind this often gives to tenants. Because they have not been asked to sign anything confirming their occupation of your premises this can often make them believe the terms are flexible and that they are not tied into the premises in anyway. It can give your tenants the wrong impression.
When it comes to protecting your rights it is always better to have a lease in place and can save you the time and money when you come to enforce payment of rent arrears.
If you would like to discuss the issues raised in this article further please contact Susan Lewis.