With the Premier League title race hotting up this February, our Commercial Property associate - solicitor Phil Jacques has set out his title-winning formula for tenants in the tech sector to aim for when defending and attacking contracted-out leases.
GK - Yield Up (1)
Aim for solidity between the sticks by limiting yielding-up (reinstatement) liabilities at the outset. Landlords will generally want a full repairing liability which can be very costly to tenants at the end of the lease. Schedules of condition can help limit liability and stop any own-goals.
RB - Break Clause (2)
The modern full back (and break clause) is able to defend and attack. Defend solidly by ensuring break clauses are unconditional, or conditions are not onerous. Support the attack by ensuring Landlords allow flexibility with at least one break option during the lease term.
CB - Insurance (6)
Shield against onerous insurance liabilities to ensure insurance contributions are fair, reasonable and based on square footage of the premises or some other certain formula.
CB – Service charge (5)
Defend on service charge provisions by aiming for a service charge cap to ensure there are no hidden surprises and lease costs are certain. Nod away danger by reviewing previous accounts and checking forthcoming expenditure so the cost of replacement of those draughty windows or that ancient lift doesn’t end up in your net!
LB – Use (3)
Contribute from wide by ensuring use provisions are not excessive and change of use is permitted. Defend well to ensure a wide use to appeal to potential undertenants and/or assignees.
DMF – Rent Review (4)
Go for a solid base in central midfield. Rent review provisions should be at reasonable intervals and should attempt, however unlikely it may be, to be open market reviews (not upward-only). Defend to ensure the assumptions and disregards presume reality where possible.
MF – Assignment (8)
The centre of the park needs solidity with creative flair. The assignment and underlettings should go together like Scholes/Keane in 1999. Ensure assignment provisions allow you to dispose of the lease during the term so conditions to assignment should be fair and realistic. Attack from the middle to ensure Landlord’s cannot require, in addition to Authorised Guarantee Agreements, both a rent deposit and a separate guarantee from potential assignees.
MF – Underletting (10)
Compliment the Assignment clause with equally satisfactory underletting provisions. Go for flexibility to allow you to underlet the premises with relative freedom (ideally at market rent only). Shoot from distance to aim for underletting of part!
RW – Incentives (7)
Attack down the right flank to maximise the new opportunity in your new premises. Rent free periods and capital contributions from landlords towards fitting-out can contribute to a winning formula.
LW – Alterations (11)
Cut inside and score from distance to give yourself freedom to adapt the premises physically, with minimal delay and cost.
FW – Connectivity (9)
Attack to ensure your modern business gains reliable and swift broadband and telephone services without the requirement for cumbersome wayleave agreements at the tenant’s cost. Gone are the days of the big lumpy wayleave agreements up front. Connectivity should be set-up from day one to ensure 20+ goals a season.
If you require further tactical guidance to ensure a winning formula for your lease terms, contact the property team by email at [email protected].
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.