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Thomas
Thomas, Lawyer
Category: UK Law
Satisfied Customers: 7505
Experience:  BA (Hons), PgDip, Practising Solicitor
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We are looking at a cafe business. The current owner wants

Resolved Question:

We are looking at a cafe business. The current owner wants £30K for a 5 year lease and the rent is £500/month.

At the end of the 5 years is the £30K payable again to renew the lease or not?
Submitted: 6 years ago.
Category: UK Law
Expert:  Thomas replied 6 years ago.

Hi,

 

Thanks for your question.

 

Are you taking an assignment of an existing lease from the current tenant (by buying his business), or are you being offered a 5 year lease by the owner of the freehold of the property?

 

Kind regards,

 

 

 

Tom

Customer: replied 6 years ago.

Tom

 

I believe it is an assignment of current lease by buying her cafe business. She says the lease has just been renewed for five years with a rent review in two years time.

 

Regards

George

Expert:  Thomas replied 6 years ago.

Hi George,

 

Thank you for your reply.

 

In that case, you need to find out whether the lease is excluded from the Landlord and Tenant Act 1954. This act grants an automatic right to a renewal of the Lease at the end of the lease term. If it is excluded from the act then you will have no automatic right to a renewal of the lease and will have to negotiate a new lease with the landlord near the end of the term. Ask and check the original lease, if it is excluded then it will contain a clause stating that the Act is not to apply to the lease and the original tenant will have sworn a declaration stating they were aware of this.

 

The £30, 000.00 fee you are paying sounds like the fee for the purchase of the business from the existing tenant and will include amounts for the goodwill of the property and the fixtures and fittings present at the cafe so you will not have to pay for this again if and when you negotiate a new lease with the landlord.

 

However, if the lease is excluded from he Act you should take the landlord's temperature on whether he is likely to ask for a premium for him granting a new lease at the end of the term. If the lease is not excluded from the Act then you have nothing to worry about in terms of further fees because you will simply be able to apply to Court for a renewal of the lease (albeit at possibly a revised rent).

 

If this has been useful please kindly click accept so that I may be rewarded for my efforts. It will be gratefully received and you will be free to ask follow up questions.

Kind regards,

Tom

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