Short Term Lets May Offer Seasonal Cheer To Businesses
After a turbulent year, many landlords will be desperate to fill vacant premises. The list of problems is endless, including the cost of maintaining premises without the benefit of rental income, not to mention business rate liability. There is also the additional risk of vandalism and occupation by squatters.
The Christmas period however, is an opportunity for temporary short term lets that can alleviate these difficulties and, virus restrictions permitting, provide a much needed income stream. Countering the advantages however, are the potential pitfalls in these transactions and care must be taken over both the identity of temporary occupiers and the terms of such occupation.
There are other issues that need to be considered:-
- Ensure the occupier is not given security of tenure. Provided the tenancy is for a short term let, of less than six months with no ability to renew (assuming no previous period of occupation by that occupier), the tenant will not receive the benefit of security of tenure under the Landlord and Tenant Act 1954
- Ask for the rent for the entire term to be paid in advance on completion of the tenancy agreement. In a short term let tenancy, this isn’t much to ask and helps to protect landlords against “fly traders”, who suddenly vacate and disappear before making the necessary rental payment. If possible, landlords should also get a rent deposit to guard against damage to the property
- The tenant should not be allowed to assign or sublet the premises or carry out any alterations, save for its very basic fit out in view of the short-term nature of the occupation.
- Make the tenant responsible for payment of the business rates and all other outgoings arising in relation to the premises
- To save on administrative costs, agree a rental figure inclusive of service charge and insurance rent (if applicable). A periodic and variable service charge is not appropriate for a short-term let.
- The tenant should be responsible for keeping the premises in the same condition than they were in at the time occupation was taken. If possible, prepare a photographic schedule of condition and attach it to the tenancy as evidence of the original condition of the premises.
If the landlord is itself a tenant of the premises, check the terms of the superior lease to determine whether subletting is permitted or requires the superior landlord’s prior consent. Care must of course be taken that the terms of the superior lease or any existing security over the property are not breached.
With all of this in mind, although a temporary short term let has been granted, this could be more than a short-term solution and the tenant could decide to remain in occupation on a more permanent basis. In these circumstances however, the tenant must not occupy the premises beyond the term of the original tenancy without entering into a new contracted out lease. Otherwise, you run the risk of unintentionally giving the tenant security of tenure.
Provided you guard against these pitfalls, the granting of temporary short term lets, could bring some much needed Christmas cheer to landlords of vacant premises.
If you have any questions regarding short or long term leases, please contact me via david.stone@GAsolicitors.com or call 01752 203500 and I will be happy to help.