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SDLT may be payable by a tenant when they take on a lease. This is based on the Net Present Value. The HMRC provide a useful tool for calculating the SDLT payable.

The calculation is based on the highest known rent in the first 5 years of the lease. If there is a rent review in the first five years then once this has taken place a further SDLT return is required and any SDLT due has to be paid.

Rent reviews after the first 5 years are ignored save for abnormal rent reviews. Abnormal rent reviews only apply to leases granted after the 1st December 2003. The tenant needs to assess whether the rent reviews is abnormal, there is a calculator on the HMRC but the calculation is quite complex. If the rent review is abnormal then any SDLT due will need to be paid.

SDLT is a complex area and therefore we would always suggest that our clients take specialist advice on such.

Christie Limb

 

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confusedWhen many clients approach us they generally have already agreed the new terms of their lease.  Very often however they have not negotiated the terms of their lease very well or at all.  The market is considerably more tenant friendly and as such you should consider the following as items a tenant should consider when re-negotiating.

 

Rent

You should always attempt to get the rent to be decreased. Unlike a normal rent review during the term of the lease which will almost certainly be upwards only, on renewal you can re-negotiate the amount that you pay.

Rent-free

Does the property need any works carried out. Rather than the landlord doing this could you as the tenant carry out the works but not pay any rent for the period that they are being carried out?

Break clauses

You should look to insert break clauses at regular intervals to ensure that this gives you as much flexibility for your business as possible and to suit your needs. However, this may result in higher rents to rent penalties.

Repair

You should always resist any attempt to insert into the new lease any obligation to put or keep the property in repair. Depending on the length of the lease this may be a significant expenditure at the end of the lease. If the landlord refuses to have this removed then you should insist that a schedule of repair is included in the lease to record the condition of the property when you took it on.

Alienation or transferring the lease

You should attempt to have as much control over who you transfer the lease to and limit the consents that you need to obtain to do this. This should be applicable for when you transfer or assign the lease and when you underlet or grant sub-tenancies.

Service Charge

You should ensure that this is as low as possible and that it is capped so that it does not become a ‘blank cheque’ clause for the Landlord.

Rent Review

If the landlord insists that this is included then please ensure that it is downwards as well as upwards. You should also pay close attention to the assumptions contained in the rent review provisions.

User Clause

This needs to be as wide as possible and allows you to diversify slightly if required.  You should also consider that a restrictive clause will limit who you can assign or sublet to.

Monthly rent payments

Look at how and when the rent is paid. This can have a significant impact on your business cash flow. Generally you would want monthly payments to assist with your cash flow.

If you are thinking of renewing your lease and want to chat about any concerns why not drop us a line for an informal chat on your concerns on 01623451111 or wjames@fidler.co.uk. Alternatively you can visit our web page for more information on commercial property.

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You will almost certainly have noticed in the press over the last week or so the proposals for the second phase of the new high speed rail network or HS2.

This will affect numerous properties and businesses in the East Midlands.  The Department for Transport will have already written to the properties and business that the HS2 that are close to the proposed route.  It is anticipated that construction of the route will start in 2016 and between now and then there will be a programme of land referencing to identify specifically the properties that will be affected by this.

Once the properties are identified, they owners will be contacted and the potential compulsory acquisition and the process in general will be discussed.

The principle behind compulsory purchase is the it must benefit society as a a whole and be for the greater public good. Only organisations or bodies such as the  local authority, highways agencies and Regional Development Agencies can force you to sell your home.

The price that you get for your property is basically no more than the market value plus a grant for the inconvenience and relocation costs. The amount you receive is just the market value and not the ‘ransom value’ your property may have by virtue of the fact that it is pivotal to the route of the rail link. If your house is located in an area which has a depressed market this could reduce significantly the amount that you will be paid.

In addition to the statutory compensation code, the secretary of state has asked that proposals for discretionary measures be brought forward, aimed at mitigating as far as is reasonably possible, the effect of the project on property markets, and on peoples’ lives.  Further announcements about these proposals will be forthcoming but are likely to  include:

  • a sale and rent back scheme for properties required for compulsory purchase, which would give people more choice as to when they left their property
  • the advance payment of a compensation claim, for example, to aid relocation.

If you have received such a letter or are concerned that your property may be affected by the recent proposals and would like more information on this then please drop William James a line on 01623 451111 or alternatively email me on wjames@fidler.co.uk or visit our website.

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