Flexibility is an option
10/10/2011
By Joanne Wright, Senior Associate in Commercial Property & Development.
The property market although showing signs of recovery, is still suffering from the effects of the recession and the downturn in consumer spending. The number of vacant shops has risen significantly leaving landlords exposed to the liability to pay business rates on empty properties.
The ‘meanwhile lease’
One of the most recent initiatives is the meanwhile lease - a government led initiative encouraging temporary occupation of vacant units for non-commercial purposes. The intention is to revive town centre trading and high streets.
Advantages of the meanwhile lease
Local voluntary or charitable groups, information centres, artists and musicians, who would not normally be able to afford to rent out prime space will be able to use a vacant property temporarily and rent free. The landlord will have comfort that
- their liability and exposure to business rates will be dealt with
- their premises will be maintained and
- the lease can be drafted in such a way that the landlord will be able to get the property back quickly once they can let it again commercially.
This affords landlords the opportunity to look for a permanent new tenant and the occupation of the unit will hopefully contribute to the viability and vitality of the town centre or high street.
How it works
The length of occupation of the units can last between one week to several years and the use need not be continuous. Clauses can be drafted to protect the landlord to ensure that the tenant does not use the property for any commercial gain or for operating a profit making business.
The occupier will also be subject to a basic repair obligation and this can be linked to a schedule of condition. The lease will be personal to the tenant.
The introduction of this initiative to stimulate the sluggish property market is certain to pave the way for further initiatives and a more flexible approach being adopted by both landlords and tenants. This will hopefully speed up the letting process and streamline letting documentation so a more ‘common’ approach can be adopted.