Lease Variations – The Law of Unintended Consequences

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The demand for increased flexibility in lease terms means tenants are looking to change use, carry out alterations and share occupation, as well as looking to negotiate pandemic clauses, recast rental arrangements, vary term lengths and rethink the extent of their demise.  Both the lawyer documenting any lease variations and the agent negotiating heads of terms need to be aware of the potential for serious problems to be created, such as conferring security of tenure, adverse impact on rent review, and additional SDLT liability, and be able to structure deals so as to avoid them.

• Not all lease variations are easily identified as such
• Guarantors and former tenants may be released from obligations
• Clarity is needed as to the position of successors in title
• Revised rental arrangements will have an impact on other lease terms
• Incorporating lease terms by reference in supplemental leases requires a sharp eye for detail

Mark Shelton, Commercial Property Management Law Trainer