Real Estate Tip of the Week: Great news, your tenant wants to stay...but - DAC Beachcroft

Real Estate Tip of the Week: Great news, your tenant wants to stay...but's Tags

Tags related to this article

Real Estate Tip of the Week: Great news, your tenant wants to stay...but

Published 12 September 2016

It is great news for landlords when the terms of a new lease are agreed with an existing tenant before the current lease has come to an end. There will be continuing income from a known and trusted tenant, and no need to deal with dilapidations or spend time considering new fit out works.

However, even if the agreement reached seems straightforward and the new lease is to be in the same form as the current one, there are still some important considerations for landlords before entering into the new lease.

A lease entered into before an existing lease has expired, which is to take effect on expiry of the existing lease, is called a reversionary lease.

Before entering into a reversionary lease landlords should consider our previous tip on reversionary leases and the following:

  • Any break provisions in the existing lease. These could have unforeseen consequences if they are imported into a reversionary lease by reference and not expressly deleted or modified.
  • Removal and reinstatement of alterations undertaken during the existing lease term. These should be expressly referred to in the tenant's repair and yield up obligations in the new lease. Whether they are to be disregarded on rent review must also be considered.
  • Key dates in the existing lease. For example, decorating dates referable to a periodic cycle must be correctly updated and rent review dates should be carefully considered.

As always, however simple you think a transaction may be, it is wise to seek legal advice as early as possible when you are thinking about entering into a reversionary lease.

Authors

Vicky Banks

Vicky Banks

London - Fetter Lane

+44 (0) 20 7894 6431

< Back to articles