Tesco Towns – and check out for local businesses

First the loss of trade to out of town car- borne sites, at least the local shops could provide niche convenience stores. Next Tesco themselves are introducing convenience stores and as a result local shops are disappearing.

This is part of a larger problem that affects not just retail premises but also industrial and offices and we believe this makes two recently reported cases even more significant for solicitors.

The first - Thomas V Ken Thomas Ltd

The tenant of a warehouse got into financial difficulties only 7 months into a 10 year term and as a result went into a company voluntary agreement ( CVA). The Court of Appeal ruled that the landlord had lost the right to forfeiture under the lease as it had accepted a deferred rent payment

The second - Reichman & Dunn v Beveridge Gauntlett

This time the Court of Appeal rejected a claim by the tenant that the landlord should take steps to re-let the premises and mitigate his loss of rent arrears, this was after the tenant, a firm of solicitors had moved out 3 years into a 5 year lease.

In many cases commercial rents are too high. Invariably these are based on what is seen as key money to get into a property and have little or no bearing on the trading potential of a “reasonably minded tenant”. Nor do such rents properly reflect competition or potential competition from outside. This can distort the picture during the lease and where there is a rent review which usually has regard to letting evidence as giving the greatest weight.

On the other hand some businesses are oblivious to the proper cost of occupying property. Unfortunately these do not take advice as to the possible level of rents on review when planning and budgeting.

The opportunity for solicitors and valuation surveyors to give professional advice has hardly been greater.

On 11 January last week we asked businesses to seek help on property leases as part of a new - year resolution.

http://www.rdn.co.uk/newsroom.htm

To avoid problems in the future this is one resolution that must be kept! 

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This is part of a regular series of topical articles provided exclusively by RDN Chartered Surveyors. If you would like further information or add your comments please reply to this e mail or contact Roger Nelson on 0800 902 0466