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Practicalities & pitfalls of sharing business premises

17 April 2020 | Julian Pyrke

What You Should Know Before Sharing Business Premises

In these somewhat turbulence times, we appreciate there may be a commercial need to permit a third party to occupy business premises so as to cut costs.

A lot of our clients regularly contact us with arrangements they have already made with a third party asking us to document this or perhaps asking for advice after the event.

Landlord & Tenant Act 1954 Part II

Some care needs to be taken when allowing a third party to occupy business premises as one of the main considerations that any would be landlord needs to consider is the impact of the Landlord & Tenant Act 1954 Part II. 

The 1954 Act sets out that a business tenant who occupies business property and has exclusive possession will obtain ongoing security of tenure at a property. The Act provides that a business tenant that obtains security of tenure is entitled to a new Lease at the end of the contractual term. It is perhaps sobering to remember that a commercial Lease need not be in writing and could be created due to circumstances and a tenant occupying the property.

Too often we see our clients enter into arrangements with third parties, sometimes they are “good friends and there will not be a problem”, only to find that further on down the line there is. 

Before allowing a third party to occupy your property please do take some time to reflect on the ongoing implications of this course of action and the possibility that such occupier obtains the security of tenure afforded by the 1954 Act. Can you ask them to vacate when you need to? If a tenant yourself, will you be in breach with your landlord? If the property is charged then what about the bank and their requirements? 

Short Term Letting

With the right legal advice you can mitigate your risk.  As specialist commercial property solicitors we are able to put in place short term letting documents. These are designed to sit outside the 1954 Act or put in a place a commercial Lease which contracts out the security of tenure provisions set out in the 1954 Act.

A quick telephone call with one of our specialist team can pay dividends in the long run since all too often we are presented with issues that have arisen due to parties agreeing the terms on a “handshake”. For expert commercial property legal advice please contact:

Julian Pyrke, Director – 0117 906 9421 – julian.pyrke@gregglatchams.com

Jonathan Wilson, Associate Director – 0117 906 9413-jonathan.wilson@gregglatchams.com

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.

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