VIEW, Issue three, 2012


Website: viewdigital.org


Page 17


to consider renting premises, rather than buying outright.


Why charities should look at rent option D


espite the fact that we’re currently experi- encing historically low interest rates, there is still a strong case to be made for charities


Whether it’s the difficulty of building up the cash to place a deposit or wanting the flexibility to scout out a location before establishing a more permanent base, rental offers a charity a range of options and also enables you to outsource the ad- ministration costs of running a building. There is also more value in the rental market


Teresa Curran is a partner in Edwards & Co. Solicitors. She leads the property department and is a specialist in the social housing sector and advising clients in relation to commercial leases


than you might first think. The current economic climate has created uncertain times for landlords as many businesses have been hard hit and occupa- tion rates of commercial premises have fallen. Whilst this situation has not been a happy one


for all landlords, it has been a boon period for ten- ants, who now have the opportunity to agree terms with landlords that may not have been possi- ble some years ago. What landlords are looking for above all else is stability. Landlords are liable to pay business rates on their properties and are keener than ever to se- cure and keep good tenants. Additionally, as a charitable organisation, if you’re coming to the end of a lease or considering start- ing afresh, it’s in the best interests of your service users that you drive a really strong bargain and se- cure the best terms possible. In practical terms, there are a number of ‘pivot points’ within a deal that can be varied in order to make a rental agreement work for your charity: • The term – In the current economic climate, landlords are more prepared to grant shorter term leases e.g. five years. This can be particularly attrac- tive when you are a start-up business or charity dependent on potentially volatile funding streams. • Break clauses – These can prove useful for a tenant who sees his business requirements chang- ing before the end of the term granted – they en- able you to walk away from the lease. Yet you must give careful consideration to any conditions at- tached to break clauses and seek maximum flexibil-


are fit-out works to be carried out. In some cases it is even appropriate to seek a contribution from the landlord to the works. • Rent review provisions – Rent review clauses are usually drafted to the advantage of the landlord on the basis of open-market value. In a falling market, the landlord will want to ensure that the reviewed rent does not fall below the previous rent and could argue for fixed percentage in- creases. You should consider if the retail price index or other appropriate index as a basis for reviewing the rent would be more attractive and beneficial. You will also want to consider whether to negoti- ate a cap on the reviewed rent. The complexity of these conditions makes it cru- cial that you seek professional advice in the draft- ing process.


rental market. You should seize opportunities while you can as they are unlikely to persist once the market recovers. You also need to be aware that leases are not to be entered in to lightly and we here at Edwards & Co. can offer you the personal care and expertise to secure a great deal.


ity. If you’re in an existing lease, a break clause gives you a strong bargaining tool in rent negotiations – but whilst this is financially advantageous, it carries some risk. You should seek professional advice be- fore exploring this option. • Rent free periods – You should look for a substantial rent-free period, especially when there


At the moment, we’re in an unusually subdued


Our specialist advice will help you with the many details that require careful attention: not least the description of the premises themselves, the repair- ing obligations, insurance and service charges.


• Contact Teresa Curran at Edwards and Co solicitors, 28 Hill Street, Belfast, 02890 321863


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