Wedlake Bell commercial property partner Suzanne Gill is
providing a series of articles for HR professionals to give them a
better understanding of the issues accompanying surplus
Many companies are reviewing their staff requirements in the
light of the Brexit referendum result and long term trends such as
increasing automation in the workplace. Sometimes a reduction in
employee numbers goes hand in hand with a reduction in the
requirement for premises - and often hard-pressed HR teams
find they are dealing with lease disposals as well as redundancy
The first thing to be aware of is that, much like an employment
contract, some clauses are implied by law into the landlord and
tenant relationship. It's important to read the lease and be
aware of its terms, but the lease itself is not the whole story.
In particular, the Landlord and Tenant Act 1954 gives
occupiers of business premises in England and Wales a right to
remain at the premises following the end of the lease, unless
certain procedures are followed. This is known as
"security of tenure". If your lease is protected by
the Landlord and Tenant Act you might find that the tenant company
is liable to pay rent for longer than the dates specified in the
lease, so it's important to check whether this Act applies.
There are a number of possible ways of leaving premises, or
reducing your occupation of them.
the lease comes to an end
the lease contains a "break" right allowing either
landlord or tenant to end the lease at a certain time, which you
make use of
you transfer your lease to another company, meaning they step
into your shoes as tenant
you underlet your premises, or part of them, to another
Some of these options require you (as tenant) to get
landlord's consent first.
Before diving into these, don't forget the right to share
occupation of premises with group companies. If there's a chain
of ownership of more than 50% of the shares, the lease will often
allow group companies into the same space without a lease between
the two companies. Cost sharing becomes an internal accounting
exercise. Other space sharing arrangements, including those with
companies the business collaborates with, are likely to be a breach
of your lease. More formal ways of dealing with surplus space will
be considered later in the series.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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