Businesses are being warned to avoid tempting but
potentially costly shortcuts in commercial property leases.
The advice comes following the publication of a new stronger
code of practice that includes a step-by-step guide for
tenants to negotiate a lease. Leading city law firm, Hegarty
Solicitors, welcomes the code of practice, but says it is
not a substitute for expert legal advice that can often
secure substantial savings for businesses and anticipate
issues that arise years after a lease is signed.
New Government Backed Code
The new ‘Code for Leasing Business Premises’ that was
launched in March 2007 by Housing Minster Yvette Cooper, has
been published to clarify the process and aims to assist new
businesses that are new to negotiating leases for shops and
offices.
Commercial Property Partner Richard Hegarty says businesses
might be tempted to try and handle negotiating the lease
themselves, but it is their lack of experience that makes
them more vulnerable, and they need to realise the
importance of using experienced property lawyers.
Richard explained, “The new code is not compulsory but is
regarded more as a basis for negotiation rather than a
blueprint for a lease.”
“I would strongly recommend that anyone entering into lease
negotiations takes expert legal advice. The code is still
quite complicated, and businesses should take into
consideration the time they want to spend trying to
understand the lease, and what happens when something goes
wrong at a later stage”
“Also, the code is standardised but every property is
different. A commercial property lawyer would able to
provide specialist advice on each individual scenario and
know to look for anything unusual in the lease.”
Negotiating Yourself; A False Economy
He continued, “When people are starting up we know that
every penny counts, and they might think they will save
money handling the lease themselves. A commercial property
lawyer is really like an insurance policy. We are highly
experienced at negotiating leases and can often obtain a
better deal than they could themselves. The savings they
could make can dwarf the legal costs involved, and they have
peace of mind knowing they are fully aware of their rights
and commitments in the lease.”
The new code suggests that landlords may not want to tie
tenants in for lengthy periods. Richard says that when a
company is unsure of it’s future, perhaps because it is new
or in an unstable market it can make sense to have a shorter
lease period. However, many other businesses prefer to have
the security of knowing they will not be looking for other
premises or incurring moving costs in the near future.
“When you are busy running a business the last thing you
want to contend with is the pressure of having to find new
premises. The length of a lease is very important, and a
commercial property lawyer would be able you help you make a
decision to suit you and your business,” commented Richard.