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Making the most of your assets

In the current economic climate, occupiers need to understand every aspect of their property overhead and maximising the value of leases is no exception.

Where property is leased, there are two key aspects to consider as opportunities to achieve best value: leases and dilapidations. Read and understand your lease terms and always exercise the break options, regardless of your intentions. In the current property market, tenants are likely to be able to re-negotiate very competitive rents with landlords who will be keen to retain them. If this is not possible, or negotiations end in stalemate, remember, it is a buyer’s market – and you will find a better deal elsewhere, even with potential relocation costs.

On lease negotiation play hard and cap service charges when they are deemed unreasonable; particularly in older buildings with ageing plant. Other options could include renegotiation of a longer lease term or perhaps offering to help modernise the property or incorporate any necessary renovations into your long term maintenance plan in exchange for a reduced rent. If landlords serve a dilapidations claim on expiration of a lease, ensure that it is carefully scrutinised. Take professional advice - it could pay dividends.

For major occupiers, it always pays to understand your lease position and liability in terms of dilapidations on every property in which you have an interest. It is vital to have a strong grasp of the lease terms you have signed up to and the penalties that will be levied if you come out of that lease. Whether you are a landlord or a tenant, the importance of maximising the benefit to be gained from your premises cannot be underestimated or understated.

For more information contact Ian Laurie, Associate in Watts’ Manchester office on 0161 831 6180

Watts Pocket Handbook

The Watts Bulletin is the technical companion to the Watts Pocket Handbook, the essential guide to property and construction, as used by professionals since 1983.

Watts Bulletin editor: Trevor Rushton.

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