For landlords having just agreed heads of terms (HOTs) the next step would be, to make a head start on the next stage of the process of documenting the lease. By compiling the key documents relevant to the premises at the outset considerable time will be saved streamlining the process. You should have available:
- The agreed HOTs – a breakdown of the key terms of the new lease including details of the rent, length of the lease, commencement date, details of any break clauses, rent review frequency, any rent free periods, whether the lease will be inside or outside the LTA 1954 Act, and any other terms of the new lease.
- Land Registry compliant lease plan – nearly all leases of commercial premises come with a plan to show the extent of the premises which a tenant would be occupying. The tenant may also have rights to access common areas or parking spaces which need to be identified. Land Registry have a strict format in which lease plans must be prepared and if not properly prepared then these can cause delays including delays to the registration process if the lease must be registered at Land Registry.
- Title deeds and title plans – your solicitor must obtain its own up to date copies of the title deeds from the Land Registry. However, you can provide your solicitor with recent copies of these documents. If your solicitor is able to easily locate the title number and property address, then this will save time searching the Land Registry maps and records for the correct property.
- EPC and EPC recommendation report – this must be provided by law and the landlord would be fined if this is not made available to the tenant. From 01 April 2023 new leases of commercial premises must show an EPC energy rating of “E” or above.
- Building insurance policy documents – this should be the most up to date insurance policy. It should show the policy cover start date and end date. It should also show the total cost of the premium for the policy together with IPT. If the tenant is occupying only part of the building, then you will want to decide on the amount of contribution the tenant would be responsible for.
- Details of any service charges and costs – this should include a breakdown of the services carried out together with the estimated costs of those services. If the tenant is occupying only part of the building, then you will want to decide on the amount of contribution the tenant would be for.
- Asbestos report – by law there must be a plan in place to deal with asbestos in commercial premises. Breaches of asbestos regulations can involve fines together with imprisonment.
- Consent to lease – this should be considered at the outset to avoid any pre-completion delays. If the premises are mortgaged, then it is usually a condition of your mortgage lender that you seek its consent before the new lease is granted. This is irrespective of the length of the term of the lease. If the lease requires registration at Land Registry, then the lender’s consent to lease will form part of the tenant’s Land Registry application. It is always suggested a Landlord contacts the lender at an early stage to find out their requirements and any fees applicable in obtaining the ‘consent to lease’.
- Replies to standard enquires – nearly all commercial solicitors use a standard for of enquiry called CPSE enquires. There are different versions depending on the transaction. Make sure these are filled out early in the transaction to avoid delays.
To get your new lease transaction off the ground, handing over these documents at the earliest stage will avoid delays, and will also avoid any last-minute request for these documents to be supplied. The avoidance of delays is critical to meet deadlines for formal completion of the new lease and to avoid missing out on any rent due to the delay.
If you are currently going through the process of signing or renewing a lease for a commercial property and would like legal guidance, our Commercial Property team is more than happy to assist.
The above is meant to be only advice and is correct as of the time of posting. This article was written by Inderdeep Kanda, Solicitor in the Commercial Property team at Pinney Talfourd LLP Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as of March 2023.