UK Law and Practice Contributed by: Colin Rodrigues and Harminder Sandhu, Hawkins Hatton Corporate Lawyers Ltd
6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time The law recognises the following arrangements that allow a person, company or other organisa - tion to occupy and use real estate for a limited period of time without buying it outright: • a lease, which grants exclusive occupation of the property for an agreed period; and • a licence, which grants occupation of a prop - erty without exclusive possession. 6.2 Types of Commercial Leases There are no specific different types of commer - cial leases. The nature of any lease, in terms of its duration, rental, break clause, etc, is a mat - ter of negotiation and agreement between the parties. The Code for Leasing Business Premises came into force in September 2020, with the aim of assisting negotiations in producing comprehen - sive heads of terms to make the legal drafting process more effective. 6.3 Regulation of Rents or Lease Terms The Code for Leasing Business Premises pro - vides a code of practice governing the negotia - tion of leases between landlords and tenants. On 23 March 2020, the UK government announced that commercial landlords could not pursue for - feiture of a commercial lease for non-payment of rent pursuant to Section 82 of the Coronavirus Act 2020. This prohibition remained in force until restrictions were lifted in March 2022, except for restrictions on rent arrears during the pandemic which had to be decided by arbitration. On 23 September 2022, all restrictions were lifted and
will take effect in 2024 on the passing of the Finance Act 2024, which attained Royal Assent on 22 February 2024. One of the changes is that investors will not be treated as being “holders of excessive rights” (which can give rise to tax liabilities for the REIT) if such holders are taxed at a double tax agreement at a set rate. 5.4 Minimum Capital Requirement No minimum capital requirement applies in the case of LLPs and private limited companies. A public limited company must have a minimum issued share capital of GBP50,000, with at least 25% (GBP12,500) of this being paid up in full. 5.5 Applicable Governance Requirements LLPs are governed by UK company law, but dif - fer from limited companies in that members of an LLP can manage their own interests without forming a board. Private limited companies are governed by the Companies Act 2006, and have a constitution (articles of association) to assist the sharehold - ers and directors in regulating their relationship with the company and each other. Unlike private limited companies, public limited companies require at least two directors and a company secretary. They are otherwise gov - erned by UK company law. If a public limited company is trading on a stock exchange, it will be subject to the regulations of that exchange. 5.6 Annual Entity Maintenance and Accounting Compliance The costs of annual entity maintenance and accounting compliance vary, subject to the extent of the portfolio of properties owned by each entity.
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