We regularly act for commercial landlords and tenants for leases of their Industrial Units.

Standard Industrial Lease Documentation

The documentation from the landlord’s solicitors will usually include: -evidence of the landlord’s proof of ownership of the property and the industrial site on which the property is located; -additional title documents which are registered against the landlord’s title to the property and may restrict the tenant’s intended use of the property; -a plan showing the property to be let to the tenant, together with any ancillary rights of access for HGVs, spaces allocated for unloading, and parking etc. This plan will need to be Land Registry compliant if the lease is for more than seven years; -an energy performance certificate; -the draft commercial lease; -landlord’s replies to the Commercial Property Standard enquiries and documents referred to in the replies such as buildings insurance, service charge accounts (for services provided to the estate on which the property is located), asbestos report and planning permissions for the lawful use of the premises. The planning permission will need to be for the tenant’s specific industrial use (within Classes B1, B2 or B8) in the Town and Country Planning (Use Classes) Order.

Deal Specific Documentation

There may also be deal specific documentation such as:
-a draft agreement for lease, for example to enable you or the landlord to put the property in the condition you require in order to take occupation;
-a draft licence to carry out alterations to the property;
-a draft rent deposit deed, if the landlord requires a rent deposit;
-a draft licence to underlet, if your landlord is the tenant of the property in which case the freeholder will need to consent to the underlease being granted to you;
-a declaration required by law to exclude the tenant’s legal right to a new lease at the end of the agreed term, if the parties have agreed that the automatic lease renewal rights are to be excluded;
-a draft side letter dealing with items ancillary to the lease, for example changing the frequency of the rent payments from quarterly to monthly.

Survey & Searches

The tenant is strongly advised to arrange a survey and arrange for a schedule of condition to be prepared, particularly if the lease is a full repair and insuring lease of an older industrial building where the tenant will be responsible for the structural elements of the property. The tenant is also advised to purchase a local authority search, commercial water and drainage search, and an environmental search through our offices. The results provide important information about the property, such as whether the property has the correct planning permissions and building regulations consent, that the foul water and surface water is recorded as discharging to public sewers, and that the land within which the property is located is unaffected by historical contamination issues. Where a lease is being taken of industrial land, it is particularly important to be aware of any environmental issues as the tenant may assume liability under the lease. Since the survey and the searches can sometimes take several weeks to obtain, it is important that these are ordered as soon as possible.

Additional factors to consider

When considering the financial liabilities involved in taking a new lease, you should factor into your budget additional costs such as business rates and utility rates. There may also be additional legal fees if the lease which is being granted to you is an underlease (where your landlord’s interest in the property is leasehold) and the freeholder has to give their consent to the grant of the lease. The freeholder will instruct their own solicitors to formalise their consent in the form of a licence to underlet.
The new lease may also attract stamp duty land tax, depending on the length of the lease, whether a premium is being paid and the amount of annual rent, including any VAT payable. A stamp duty land tax return will usually need to be completed and submitted to the inland revenue.

If you choose to use our services

If you choose to instruct us on your behalf we will advise you on the clauses within the lease, and will negotiate any excessively onerous terms with the landlord’s solicitor. You may have agreed a break clause (right to bring the lease to an early end) and if so we can advise you on the landlord’s solicitor’s suggested clause to ensure that you are fully aware of what is required from you in order to exercise this right to break.
We will advise you of your rights and obligations at the beginning of the lease, your obligations while you are in occupation of the industrial premises and also the provisions in the lease regarding the condition in which you must leave the property when the lease comes to an end.