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13/09/2011

On the face of it, there may not seem to be much value in your lease. Typically, companies don't really give much consideration to such matters as they are simply too busy concentrating on their core business and planning for short term needs. However, the commercial property market has changed and there are now excellent opportunities for occupiers to improve the terms of their lease, delivering savings in rent and other unexpected benefits for their business.

Early re-negotiation often pays off. Open negotiations with your landlord well in advance of the end of your lease or when approaching a break clause. In exchange for extending your lease, you may be able to secure better terms such as a rent-free period, agreements about future dilapidations liabilities, a long term reduction in rent or some much-needed investment in the property. Sometimes landlords are willing to make significant payments to 'buy back' breaks. If you know that your business has no need of an upcoming break clause, it could well be worth looking into the potential for 'trading' it. One client recently received £350,000 for giving up a break on a 20,000 sq ft unit.

Although it it preferable to open negotiations with your landlord when approaching your break clause or lease expiry, occupiers don't necessarily need to wait until these options are available before exploring its worth to a landlord. Flexibility and other incentives may be offered and can be introduced at any time during the lease term providing both the landlord and tenant can find mutually agreeable terms.

Many occupiers find that their requirements have changed by the time they approach the end of their current lease. Moving is not the only option. Landlords will be surprisingly accommodating to ensure they retain tenants. By exploring the options with your landlord, you may well find there is flexibility in your lease that you didn't think existed.

When renewing an existing lease or negotiating on new premises, be sure to ask for what you want. Tenants are in charge and incentives such as rent-free periods, capital contributions and stepped rentals are widely available. A short-term lease offers the greatest felxibility however; this can be achieved through a longer lease. Building in additional security by adding regular tenant breaks will provide you with the option to break your lease usually without penalty.

Finally, it is well worth asking for advice on your lease options. Vail Williams LLP is well placed to offer advice on lease restructuring opportunities and achieving the best results upon renewal. If you choose to relocate your business our well qualified and experienced Business Space teams have excellent knowledge to secure the best possible terms available.