UK Law and Practice Contributed by: Colin Rodrigues and Harminder Sandhu, Hawkins Hatton Corporate Lawyers Ltd
6.8 Costs Payable by a Tenant at the Start of a Lease A deposit may be payable under a rent deposit deed at the start of a lease. In addition, a ten - ant will be responsible for the registration of the lease (if it is for more than seven years), as well as for payment of the modest registration fee. SDLT is also payable for a commercial lease, as detailed in 2.10 Taxes Applicable to a Trans- action . Subject to negotiation, insurance rent and service charges may also be payable at the outset. 6.9 Payment of Maintenance and Repair The landlord is responsible for the maintenance and repair of the common areas used by ten - ants. The landlord will usually undertake to pro - vide these services on the estate and recoup the cost from tenants via a service charge. 6.10 Payment of Utilities and Telecommunications A tenant will be responsible for the utilities it con - sumes, and these will be apportioned according to the space occupied by the tenant, unless the supply is segregated. 6.11 Insurance Issues The landlord usually insures the property and passes this cost on to the tenant. The typical risks insured against include: • fire; • explosion; • lightning; • earthquake; • storm; • flood; • bursting and overflowing of water tanks, apparatus or pipes;
the lease forfeiture procedure is now governed by the contractual lease. 6.4 Typical Terms of a Lease There is no typical length of a lease. A tenant will generally covenant to maintain and repair the property in a long lease. A tenant will limit its liability by recording the state of repair of the property at the commencement of the lease with a schedule of condition. It is usual for lease rents to be paid quarterly, namely on March 25th, June 24th, September 29th and December 25th. Following the COVID-19 pandemic, the parties to a commercial lease will give consideration to more flexible arrangements, such as rent-free periods, break clauses and/or rental based on turnover or performance criteria. 6.5 Rent Variation The rent payable under a lease will remain the same for the duration of the lease term, unless there is a rent review clause. 6.6 Determination of New Rent New rent under an existing lease will be deter - mined in accordance with the rent review clause, if such a clause exists. It is usual for the rent review clause to be “upwards only”. The revised rent will be the greater of the rent payable at the time of the rent review and the market rent determined by a surveyor. Less common rent review clauses provide that the rent will be reviewed in line with inflation. 6.7 Payment of VAT VAT is only payable on rent at the current rate of 20% if the landlord has opted to tax the property.
1075 CHAMBERS.COM
Powered by FlippingBook