Commercial lease disputes can be a seemingly endless source of frustration for Scottish businesses. They disrupt your business and can have serious financial consequences. There are many things that could cause friction between yourself and the landlord. Knowing what these are, and how to prepare for disputes, can save you a lot of time and money.
As solicitors in Glasgow we’ve seen plenty of these disputes. Here are some of common problems, and how you can prepare for them.
Renewing the Lease
Leases that are protected under the Landlord & Tenant Act of 1954 automatically continue beyond their expiry date until either party brings them to a close. If either you, or your landlord, wants to end the lease, you will need to provide at least three months’ notice. You have the right to have the lease renewed, which is useful if rent in the market has fallen and you want to secure more favourable terms. Your landlord can also renew the lease.
Decide what the future holds for your business. If you are unsure as to whether you will still require the premises in the near future, you might be better off letting the current lease continue. A new lease, even if you end up paying cheaper rent, could bind you to the property for longer.
Defaulting on Rent Payments
If you think you will be unable to pay your rent, you should let your landlord know immediately. Don’t wait until it actually happens – your landlord may be happy to change the payment terms for a short period of time, such as allowing you to pay the next quarter’s rent in monthly instalments. You might even be able to renegotiate your lease, especially if the landlord doesn’t think they will be able to find new tenants for a long time.
Landlords have several ways of dealing with rent arrears, such as distraint and forfeiture. Distraint is where bailiffs are sent in to seize goods as a replacement for owed rent, while forfeiture involves your landlord entering the premises and changing the locks to prevent you from entering, ending the tenancy. Check your lease carefully – there should be clauses that state when your landlord is allowed to do this.
If you have a long lease, it will likely include a stipulation that the rent is reviewed every few years to make sure you are paying a fair price. This will usually be to the landlord’s advantage, with the lease stating that rent can only go up following a review, not down. Rent reviews can be backdated, so make sure you know when it is meant to happen, as this could have a serious impact upon your finances if you suddenly find you owe a higher rent.
The best way to be prepared for this is to get the property valued by a market expert. This way you are prepared for the review, able to budget for expected rises, or negotiate if the landlord tries to raise rent above current market levels.
The easiest way to avoid service charges is to make sure you understand what they are and who is required to pay them. You may not have realised that you were responsible for certain costs, or that you have been paying for charges that you shouldn’t have.
With any of the problems listed above relating to commercial lease disputes, the way to protect yourself is to get professional advice from solicitors in Glasgow. We can advise you on your legal obligations and help you understand your lease agreement. Get in touch with us today.