Posted on 3rd September 2010

Help on Hand to Overcome Problem of Empty Town Centre Shops

A policy, implemented by the previous Government, aimed at combating the increasing amount of vacant retail space has failed to make a much-needed impact on recession-hit town and city centres, according to Mark Clayton, Commercial Property Partner at Latimer Hinks Solicitors.

 

Mr Clayton said: "It is now more than six months since the last government published its "meanwhile use specimen leases with little or no fanfare, and if my firms experience is anything to go by the whole concept of "meanwhile leases has failed to light the imagination of commercial property professionals and others involved in the letting of retail property.

 

This kind of lease aims is to provide an "industry standard legal document to facilitate temporary occupation of empty town centre retail premises by non-commercial occupiers and minimise the associated costs for both landlords and tenants, helping to breathe new life into town centres, which have been badly affected by the current economic climate

 

However, Mr Clayton believes that "meanwhile leases should be embraced more widely by the commercial property sector.

 

Mr Clayton said: "Town centre vitality was the focus but there is no reason why the same concept cannot be applied to non-retail business premises in town centres or elsewhere if there are sound commercial reasons for doing so. "

 

There are three specimen meanwhile leases for use in the following circumstances:

 

  • Direct lettings by a landlord to a temporary occupier.
  • Lettings by a landlord to an intermediary for sub-letting purposes. A typical intermediary would be a local authority.
  • Sub-lettings by an intermediary.

 

Apart from relative brevity and simplicity, the key features that set these leases apart from "normal commercial ones are:

 

No rent is payable under the lease.

The lease does not impose any repairing obligations on the tenant.

 

Mr Clayton added: "Though by no means a miracle cure for all that is currently wrong with the commercial property market, there are several potential benefits to a landlord in using meanwhile leases. The benefits include:

 

  • They should be relatively quick and cheap to use.
  • They should enable the landlord to shift responsibility for payment of business rates and the cost of insuring the premises to the tenant.
  • Let premises are generally more secure than unlet ones.
  • It is in no-ones interest, least of all landlords, to have high streets and shopping centres full of empty properties.

 

Mr Clayton said: "Such leases are not appropriate in all cases. Landlords will need to seek professional advice, from solicitors, a surveyor, or both to make sure that this is the best approach for them and, if it is, that specimen wording is properly amended.

 

Points landlords should take into account when considering a meanwhile lease include:

 

  • Leases of this type are wholly unsuitable if rent is to be paid or the tenant is to carry out repairs.
  • Meanwhile leases are unlikely to be suitable for lettings of more than six months duration.
  • All such lettings need to be contracted out of the security of tenure provisions in the Landlord Tenant Act 1954.
  • Obtaining any necessary consent to the letting from a superior landlord or mortgagee.
  • The usual planning rules apply. For example, if there is to be a change of use requiring planning permission, the fact that a short term meanwhile lease is being used does not get round that problem.