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Your first question will be what is one?

Essentially it is an arrangement whereby someone guarantees or strands as a guarantor for a tenant that is being assigned a lease.

Typically this will occur when a lease is assigned to a new tenant and the outgoing tenant (under the terms of the lease) is asked to stand as a guarantor for the new tenant.

When considering a lease for the first time this is an important consideration. This will have an impact on you as the tenant if you are entering into a long lease and may at some point consider assigning your lease (such as needing to move to bigger premises). Essentially you will still have liability in respect of the lease once you have moved on.

This is a fairly standard requirement from the Landlord’s point of view and will almost always be included in the lease that you are asked to enter into. That said and depending on your negotiating position you may be able to negotiate that it is deleted. Although it would< appear that the commercial property market is beginning to improve slightly it is still very much a tenants market and if the Landlord is struggling to lease the property you may be able to have this provision successfully removed.

Another consideration is when you are setting up a new business and the lease is taken by a company that has limited its liability. The Landlord would almost certainly require that you as the director also stand as a guarantor (essentially defeating the benefit of the company being limited). This should be an important consideration as if the company or venture is not successful the you would be liable under the terms of the lease. Depending on the rent and the length of the lease this could be serious liability.

If you are considering taking on a lease and want some advice in relation to your obligations or potential pitfalls why don’t you drop us a line¬† in the commercial department on 01623 451111 or email me on wjames@fidler.co.uk

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It has been reported again that the number of shops vacant in town centres increased again last month.

Times are still tough for high street shops, no doubt the Olympics will boost trade in London and the South East but the pressure still remains on shops in the rest of the country.

For a landlord this can cause concern an empty shop means that the landlord is left with the costs of repairs, insurance and outgoings including rates. If landlords are going to find a tenant they will also have to consider terms of a lease which a few years earlier they would ever have entertained. Most tenants are now looking for short term leases with flexible break clauses. My advice to landlords is that they need remain open minded and consider short term lets even for say 12 months or less; reduced rent or rent free periods and/or rolling break options.

New tenants are uncertain about the market and are therefore reluctant to enter into long leases. Landlords needs to keep in their minds that by letting the property out a lot of the expenses are taken on by the tenant and hopefully if the tenant’s business does well the lease can be renewed after the short let has expired in any event.

If you are a landlord or tenant thinking of negotiating a lease please feel free to make contact with me I would be happy to assist. We provide fee fixed quotes for most transactions.

Christie Limb

01623 448302

climb@fidler.co.uk

 

 

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