Landlord and Tenant Commercial Law

You act for the owner of an old industrial estate. The estate is considered suitable for office development. All around the subject property the previously existing older industrial units have been replaced by modern office buildings. The estate your client owns consists of 5 buildings.

Unit 1) was let on a 15 year FRI lease inside the Landlord and Tenant Act 1954 with effect from September 2000. The tenant improved this property by building an extension and adding air-conditioning at a cost of £125,000 in 2004. These works would add approximately £14500 to the rental value if rentalised. Yields in the area are around 8%.

Unit 2) was again let on a 15 year FRI lease inside the Act from September 2000, here the tenant is not in occupation and is paying the rent due late – although the rent is being paid – they have been paying late for some time.

Unit 3) was let on a 6 year IR only lease from 2009. This lease is not within the security of tenure provisions of the 1954 Landlord and Tenant Act.

Unit 4) was let on a 15 year FRI lease from June 2004 it contains a rolling break that either party may exercise every year (from lease commencement) with a year’s notice. To exercise the break either party must give one year’s written notice. The break is conditional upon the material covenants within the lease having been complied with. The unit appears to be in a very poor condition even allowing for its age and the setting.

Unit 5) Is presently vacant, although there is strong interest from occupiers in taking this space, to use as cheap storage. Your client is minded to let the space short term but requires advice as to the basis upon which this should be achieved.

You are required to comment on how you would structure vacant possession of the units for your client, over what time frame and how, what would you need to put in place in order to be able to achieve this? What compensation if any would be payable to any tenant. You can give your answer in the form of a professional report with case references and overall strategy, by all means use time lines/Gant charts.

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