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Unreasonable rent increase - not contracted out commercial

Unreasonable rent increase - not contracted out commercial

Postby Felicity » Sun Dec 10, 2017 8:19 pm

Hi

First post - I was directed here by another member that advised me there was some good knowledge on here.

Brief synopsis is that we are coming to the end of a 5 year agreement on a commercial premises. Landlord wants to increase the rent by a substantial amount or will refuse to renew the lease. When I have looked into it more I have discovered that the lease is protected so its my understanding that we can be asked to leave by the courts but will be awarded 1 x the RV of the building. Is this true?

At the moment our choice would seem to be that we stay indefinitely and pay low rent or at least until an interim rent review can be applied for. Does the Landlord need to issue a section 25 first though as they would then be locking themselves in to a pretty substantial payment to us just to move (over £25000 in our case) so we have effectively been gifted a premises that we cant be evicted from and will only pay rent +rpi increase?

It just seems to me we must be missing something as it would be an extraordinary faux pas on the part of the Landlords?
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Re: Unreasonable rent increase - not contracted out commerci

Postby theycantdothat » Sun Dec 10, 2017 11:44 pm

You have it more or less right. Just to expand on what you say, the landlord must serve a section 25 notice stating he opposes the grant of a new lease and prove one of the statutory grounds if he wants you to leave. Otherwise, the landlord must serve a section 25 notice stating he does not oppose the grant of a new lease before he can increase the rent and the rent will be determined as set out in the 1954 Act.

More detail here:

https://www.netlawman.co.uk/ia/section-25-notice

https://www.landlordzone.co.uk/informat ... -25-notice

https://www.penningtons.co.uk/news-publ ... -act-1954/
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Re: Unreasonable rent increase - not contracted out commerci

Postby atticus » Mon Dec 11, 2017 8:20 am

tcdt refers to section 25 of the Landlord & TenantAct 1954. Part II of that Act provides protection for leasehold occupiers of business premises.
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Re: Unreasonable rent increase - not contracted out commerci

Postby dls » Tue Dec 12, 2017 2:47 pm

As you come to the end of the lease, it isnot just the landlord who needs to act. The tenant also should be doing what is necessay to peserve his rights. If everyone does what they should tidily, it can be a straightforward process. Once it gets untidy, as may be happening here, the whole thing becomes unpredictable.

The new rent is settled not be reference to the existing rent, but be reference to the commercial value of the premises. The lease can have provsions which affect this, but in the absence of such, the existing rent is not part of the equation.

You also need to understand that many landlords will agree an initial term on an uneconomic rent. That sucks you in. If after 5 years, your business has done well enough to survive, the next rent is a commercially proper rent.

Given the sums involved, professional help is recommended.
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Re: Unreasonable rent increase - not contracted out commerci

Postby theycantdothat » Wed Dec 13, 2017 10:47 am

dls wrote:Given the sums involved, professional help is recommended.


Indeed. Your first port of call should be a commercial, preferably landlord and tenant specialist, surveyor. A competent surveyor can advise on values, tactics, prepare and respond to the preliminary documentation and negotiate new terms, including rent. You only need a lawyer when the conveyancing or court is required or if tricky points of law come up. Representing yourself can be like playing poker without knowing what cards you hold.
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Re: Unreasonable rent increase - not contracted out commerci

Postby Felicity2 » Tue Jan 09, 2018 8:00 pm

Hi thanks for the advice here it has been most helpful. I had some issues with my account so had to re register.

We havent reached agreement as yet the Landlord is dictating terms and using the threat of the dilapidations clause to apply pressure to us to sign out of the act. Is this in itself an issue? We have it on email that we will be perused under this clause if we dont agree to their terms.

My brief understanding of dilapidations is that its far from straight forward to agree and that they would need to make any improvement prior to claiming from us? The building is all but derelict and is nearing the end of its life.

The other thing is that if we did agree some terms and sign out of the act under the standard law society agreement could they then just serve us notice anyway? I'm keen to agree some kind of terms as its a bit of a detraction from our business but the LL is dictating terms but from my perspective it would appear that we have the better negotiating position in that we are out of the act and the site has strong redevelopment potential?
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Re: Unreasonable rent increase - not contracted out commerci

Postby atticus » Tue Jan 09, 2018 8:34 pm

2 words: Get advice.
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Re: Unreasonable rent increase - not contracted out commerci

Postby dls » Tue Jan 09, 2018 9:35 pm

No - 5
For heavens sake, get advice
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