DAC Beachcroft Real Estate Advisory Alert: Tip of the Week - Renewal Trap
Published 9 June 2014
It's usually a cause to celebrate when a good tenant wishes to renew its lease, especially at an enhanced rent. Beware though of overlooking the effect of alterations carried out during the existing lease.
If the lease is being renewed under the Landlord and Tenant Act 1954, in determining the new rent payable the effect on rent of alterations carried out by the tenant during the term of the existing lease will almost certainly have to be disregarded. However, the obligation to reinstate should not be overlooked, whether it is a statutory or voluntary renewal.
The premises demised by the lease will be the premises as they exist at the date of renewal and so any alterations carried out during the existing lease will then become part of the new premises. Express provision should be made in the new lease if you require those alterations to be reinstated.