Unlock the Power of Digital Signature Legitimateness for Commercial Lease Agreement in United Kingdom

How to eSign a document: digital signature legitimateness for Commercial Lease Agreement in United Kingdom

[Music] okay without further ado um i'm going to start i just want to know um can everybody hear me or am i just um mouthing mute voices towards everyone thank you um well uh welcome to lisa's law's um october seminar um thank you for joining us um we are going to talk about commercial leases today for both commercial rate conveyancing for both an existing lease as well as obtaining a new lease today i'm your host and i'm your speaker my name is alex we really hope that you find this presentation useful and informative if um if you have any questions um there's going to be time at the end for you to type in the chat box and i'll do my best to answer those questions um today our webinar is sort of broken up into three different sections um the first section will be on assignment what happens then is um i'll use the shorthand buyer but usually what happens is that the buyer is the proposed assignee the person will step into the shoes of the existing tenant in a lease and sort of like questions that um usually uh proposed assignee slash buyer would have um usually landlord because he doesn't know anything about the buyer usually we'll have requirements so the first session i'll talk about what are these requirements and secondly i like to talk about sort of my experiences running into difficulties for a first-time entrepreneur and the best thing that we can do to help you to meet those landlords requirements and thirdly i'll just like flip and talk about the other side of the coin and as a seller as the current tenant so like the things both during tenancy you have to watch out for and by the time it comes to sell your business and your lease and what things you can do to help yourself to run smoothly uh the second part of my presentation on this webinar will be about new leases so instead of um stepping into the shoes of an existing lease you are sort of signing and obtaining a brand new lease with your commercial landlord and the pros and cons of each um so i was like talk about when you when as lawyers we draft these new leases things that we really want to highlight to the to the new tenant um things to look out for and the three things i really want to identify are the repair obligations uh when you drop these new leases what you have to do to um keep the premise in a good condition uh secondly uh when i draft these leases well i like to include a schedule condition and well i'll talk a little about that and um lastly um rent review courses this is actually quite topical because of the coronal virus situation um a lot of the landlords just really went able and was not really contacted by the by the tenant as long as they got their um rent but um i saw a lot of commercial leases um went past their um rent review dates and the problems that run into when that happens um the third part of my presentation this sort of applies to both the buyer of at least assignment as well as when you sign a new lease as a brand new tenant um searches that i recommend that you do when you um when you're thinking about purchasing a business and starting your tenancy and new property um the things i want to highlight are local searches water flooding searches as well as sewage searches and depending on your circumstance and i'll talk about the circumstances whether i recommend or don't recommend doing those searches um before i start i will just really want to talk about our firm a little bit um i work for lisa's law if you can't say that already we have we are good medium-sized firm we have about 35 to 40 people and um what i like about lisa small is that um we have the capabilities of a big firm we offer a lot of services that covers um a lot of legal problems or questions that you might run into so we have those capabilities of a big firm but i also like the fact that we are small enough to be nimble and flexible and we have really quick response times and we have sort of haven't lost the touch with with our with our client and i really enjoy working here and providing my legal services to my clients because the as a medium-sized firm you kind of have the advantages of both getting a big firm as well as a small firm we are funded in 2000 um we are funded in 2012 so we've been around for a while we're not going anywhere we are really centrally located in zone one uh we do take walk-ins so if you live in london and you just want to come in with your legal problem there's usually always a solicitor uh on hand in each department uh ready to talk to you um and uh so we always we're always we always have our doors open and we welcome any new inquiries and lastly i just want to highlight how diverse we are as a team we have multiple languages being spoken in our firm we i personally speak mandarin not very well and english but just in the commercial convention team that i work with we have haka speakers we have malay speakers we even have a guy who speaks italian and spanish i don't even know how that happened so we have a huge we have a diverse team of people um ready to provide services depending whatever your background is and i really enjoy working here i think it's a great place it's a great place to be working and as we provide really high quality legal services as well um the next slide is just sort of um the areas that we cover in our firm i work in the both conveyancing department for both residential and commercial conveniencing we have also have a huge thriving immigration department and we also have family law departments so if you ever have probate wealth issues custody divorce you can always come to us as well in commercial and residential convention we we do free hauls we do leaseholds uh new bills with our mortgages sometimes even contentious negotiations for leases we do that as well we also have a very capable litigation department that i work with as well everything from landlord healing disputes to commercial litigation we have to we have the ability to handle and we also have a private client and business departments as well lastly before i start i want to introduce our mobile app our online solicitor the lisa support app and you can download it um it's on both um iphone as well as android um simply open your app store or google store search for the the keywords lisa store solicitors and uh you can see your app there and i like to use it some of our clients have very good responses when it comes to scan and uploading of documents apparently it's very helpful and we also have you can also ask questions on the online inquiries we have very fast response times there's usually always this list on end and uh it's free you know everything is always good and you can use it anywhere so why not i highly recommend it a little while for myself my name is alex yang i grew up in china but um i moved to new zealand when i was about 10. um before coming to lisa's law i worked in america actually um i was the commercial litigator working in california and uh federal courts working in commercial litigation um before moving to the uk and uh joining lisa's law uh so hopefully today i can share some of my experiences and uh i hope you find this webinar useful right so firstly commercial lease assignments um what are usually the landlord's requirements um landlord can require anything as long as it's reasonable that's the that's the legal position the landlord cannot unreasonably deny a request to for you to assign lease to a new to a new to a new proposal signing the word the opportunity is unreasonable so they can ask for all sorts of things but in my experience what i find usually happens is the landlord will ask for reference letters from people that you know um the number one thing is landlord want to make sure is that they want to receive their rent on time so they'll ask for usually two traders references these are references from your trade so if you are buying a business is let's say a chinese takeaway or a dry cleaners they will ask for trade references of people who are in that industry that can vouch for your ability to run the trade um so um so i think usually what says is that you know i know this person for a number of years and uh he's uh he's has a good business acumen he knows how to run the business and uh in my experience he's honorable person and that sort of thing the second two references are from the bank and the accountant so these have nothing to do with your trade but have everything to do with your financial standing these references will say in my experience um because i'm this person's accountant or i'm this person's bank um in my reasonable opinion um he has a good financial health to pay the rent um so that's the other side of the coin where a you can run a business and b you are able to pay the rent on time so these are the two big things that usually the landlord are looking for and that's why they require these four references um obviously they will ask just for your id as well as a proof of address uh sometimes they ask for your immigration status um that's quite normal they want to find out who you are uh you're not just you know you're not a person and uh if you ever don't pay your rent they can go after you um so these are these are these are the sort of the two main requirements that i'll say 95 time what they will look for um there are some more miscellaneous things they might ask for just like you know um what's the red deposit that you want to provide um do you have a guarantor uh what's your experience in this industry uh provide you with a cv sometimes they sometimes they won't even ask for which university you went to um they might ask for all sorts of things but the operable word here is that they cannot unreasonably deny a request to sign but if you provide nothing yeah of course they can deny you a license licensed just signed lease to you and it just has to be reasonable so with those requirements in mind um how do you overcome those hurdles when you are running a business for the first time and um so i run to this problem a lot you know someone you know you you here might be wanting to start your own business and uh you can't have an accounting reference because you've never you've never ran a business you've never had a hiring accountant um your bank might not be able to provide you with um with a with a reference letter saying that you can pay hundreds and thousands pounds of events every year um so um if or you you don't know anybody who's in your trade you know you've been working as let's say a chef for a long time but you have never run a business what do you do uh so you know i'm here with to guide you through the process do the best i can try to convince the landlord for the license to sign and um so the first thing that i always like to say if if your business running a business for the first time have a business plan and yes you know all we always no one's like everyone is the first entrepreneur at some point if you want to start a business no one's no one's starting a business as a second time entrepreneur um for the first time right so it's important to sometimes have a business plan um it says that look you know my outgoings will be covered by my income stream and it covers my basic expenses so therefore if i start in the shop um i'll be able to pay my rent on time and i'll be able to um i'll be able to not be arrested and rent and um sometimes having a cv really helps um not even just a cv but like a relevant experience in the in the industry so um if you've been a chef if you run a chinese sick way of being a chef for 10 years um you can say yeah i've never run a business but i've been here for 10 years and i've been a good worker i you know i you know i do all the orders i do something that's quite related to the running of the business a lot of times that just standing itself convinces the landlord that you are able to run your business um although you're doing it for the first time um if you can't program if you can't provide any of that and usually having a guarantor helps a lot of times the outgoing tenant will be more than happy to act as a guarantor uh so if you ever go into rent arrest the current uh tenant who's selling the business to you uh is willing to sign up as a guarantor if you cut if that person is not willing to um you can ask someone with standing in the community um in your city and that sort of thing is willing to access guarantor you can also just request a higher deposit so usually it's about um two to three months of deposit uh to sign a commercial lease but you can say well you know i'm running for this first time you know you as a landlord might be concerned but you know i'm willing to put down six months of rent deposit and the landlord might be more inclined to grant you that lease uh or sorry it's not going to delays but you know have the least assignment um if you have freehold interest in property if you're willing to put that down that's also a good thing um you know running a business always comes with a risk so if you're willing to say i owe my own property in my residence you know you're not necessarily putting out putting it down as a collateral but if you even just inform the landlord you have interest in property because this property is very secure um is a very secure asset it's not going anywhere the landlord can always say well if he's a real rent i can always go up this property so just by showing something just by showing that you own a property that in the south council lord um you know to convince you to convince them to to to grant their license design um the lease um so now i'm going to talk about the other side of the coin is as the current tenant as the seller of your business um just during your ownership what do you have to sort of keep records off to by the time it comes to sell your business make that thing goes much faster um i i cannot emphasize enough as a lawyer i suppose um it's really important to keep accurate records and keep all your papers in one place um so for example everything about the shop itself from um guest records electrical certificates vat registration um or even just your um your your your agreement your your contract with just eat or delivery um you know that all sorts of things um council taxes utility bills everything just has to be there um i had an experience where um i was representing the seller of the business and um trying to um um exit the business and um get his lease sold to a buyer and i asked him um well you know the other side sent over some standard inquiries can ask you some questions on behalf of the buyer and he said yeah sure went up and i said how many points do you have how many employees do you have he said i have no idea sometimes there are really good reasons for you not to know how many employees you have as that's i'm not i'm not sort of putting blame on anyone but consider like what's the picture you're you're painting to the buyer uh when they ask you a simple question as how many employees do you have or is your property came does it come with air conditioning or not and you don't you don't have answers to questions or when they ask you can you provide us with um the most recent guests installation certificate and you just say i don't have it um you're not painting a very good picture of yourself when the other side is spending potentially tens of thousands of pounds or hundreds of thousands of pounds to purchase a business right so really it's important uh to have those records in place and by the time you come sell it it goes smoothly takes less time it's less it's less hassle the seller has that the buyer has more confidence than you as an entrepreneur um the second problem i run into is um sometimes we can't determine who's the owner of the business this map this might sound obviously but um a lot of times what happens it's for a good reason um when they run a business um in the middle of the ownership they start a company and instead of you know running the business as the person on the lease you know they start buying stock or hiring employees in the name of the company so by the time it comes to sell the company by the time sorry by the time it comes to sell the business you know both sides of lawyers were confused as to who's the owner of the business is that the person or is that the company um and um sometimes you have to put both parties into the um into sales agreement and that's just get troublesome so really it's important to find um just have in your head like okay who's the owner of the business it's just me or have i started a company am i doing business on behalf of the company or um just myself and sometimes you know just the facts on the ground can be very complicated and um extra time and extra legal costs are being incurred um just because you know when we have to come to very basic fundamental questions to determine who's the owner of the business and who's selling it the other side of the coin of lease assignment is a new lease so instead of buying an existing lease you are signing a new lease with the landlord um so firstly i just want to talk about sort of the the pros and cons of doing each um potentially it's good because there's more flexibility on drafting it's been like instead of buying a no car you are purchasing a new car so you have you can you can pick and choose uh what features of the new car you want to have so you can say you know i want 15 years of my lease or i want 20 years of my lease i want to pay rent in a quarterly manner i want to pay rent every half a year i want to pay rent every week i want to pay rent every month um i want to pick out i want to repaint the outside every three years instead of five so when you when you when you do lease assignment you are literally stepping into the shoes of the existing tenant you don't have the flexibility of the drafting the lease came as is whereas if you're drafting a brand new lease you have that flexibility so that's good the flip side of that is that it could potentially take longer when both sides have to um the lawyers have to negotiate as to what their lease will look like rather than just assignment um but it could potentially also take shorter if the lease is pretty standard you don't have to deal with all that assignment business because it's a three-person transaction this becomes usually a two-person transaction uh so potentially you can take shorter if you're the lease that you want to sign is pretty standard um there's not a lot of negotiations that needs to be done um one thing that you do have to take accounts into account is the uh the stamp duty land tax where um in the uk leases for more than seven years would have to be registered with the with the hm land registry and um if the value of the lease goes above a certain amount you usually have to pay stamp duty tests um when you register for the new lease with a lisa's assignment that that that that test has already been paid whether it was signed in the first place so you don't have to pay that um you don't have to pay that tax so depending on what your rent is and how long your lease is going to last and whether you're paying a premium on buying that lease and sometimes the the stamp duty can runs into thousands of pounds so if that's a concern that's usually something that has to be um that's how you have to consider as a factor when you think about um signing a new lease so as i was talking about before when you um when you sign a new lease you have the ability to negotiate uh courses with your new landlord and there are three different facets that i want to talk about um so three things that the landlord and the new tenant um potentially goes back and forth a lot about the sort of the main clauses that in my experience i run into um the first one is the the red obligation for i'm sorry the repair obligations um as you know when you enter into commercial lease usually you are responsible for the repairs just regular wear and tear of the commercial property um the law is very vague on this one so potentially if you don't put in any repair obligation causes into the into the lease let's say someone let's say a lloyd is totally forgot to do that there's no repair calls in your lease the the default the default position is you have to return the property in a reasonable manner that doesn't mean anything it's so general it might as well not be there um so usually what happens is that there will be very detailed courses where the the landlord solicitor and the tender solicitor figure out what is the best way forward um usually you have to be responsible for just general wear and tear uh usually has usually that usually the the leafs are very specific as to um just three decorations and painting every three to five years you have to repaint inside the outside um but they are the one thing that i really want to highlight is what is called um when the landlord can serve a schedule of dilapidation this is where the landlord can send you a piece of paper saying that well i sent a surveyor and um i found out you know the property is in a very bad condition and the survey of things is going to cost i don't know 15 000 pounds to um to fix everything um so it's really important to look at when the landlord can serve the schedule of dilapidation usually the landlord can only serve a scheduled dilapidation at the end of your tenancy or when you want to reassign the lease um but it's possible the landlord might put in the course into the lease saying that we can serve a scheduled inhabitation every five years every five years we can send someone come by with a surveyor check on the schedule check on the condition of the property and if it's in a bad condition we can send you a schedule requesting to fix all these things and as you can imagine as a small business owner if you just get hit by that one day and um the landlord asks you to fix everything for a hundred you know fifteen thousand pounds you run you run to cash four problems just immediately so it's important to find out what your rent what your repair obligations are and when the landlord can ask you of those things uh that's that's really that's really in this whatever i want to highlight because if you can't if you can't if you don't have the money to to to repair the in everything in the schedule the laption you immediately goes into what we call the pre-action phases of going to court for dispute because the land will basically send you a piece of paper demanding you to to fix a few things and uh you you're saying i'm not going to do these things and suddenly you're finding yourself um go um in a dispute with your landlord and your legal bills really add up um so um for for for repairs that's what we really want to highlight what are your obligations and when when the landlord can ask you to fix things um secondly i want to talk about what is called a schedule of condition and why i highly recommend when you sign a new lease you put that in a scheduled condition is basically just photographic evidence of the premise attached to the lease usually it is photos that's taken a few days before the new lease is signed and when the tenant gains possession of the property as a standard in my experience i don't see a lot of people doing it but i am i highly recommend it as a lawyer myself it protects both the landlord and the tenant because you have good photographic evidence of what the property was like when you when you gain possession of the property as a tenant so let's say um in the last slide i talked about the schedule of dilapidation the landlord serves five years later serves you a scheduled deliveration tell you to fix that door because the door is broken if you have photographic evidence of the door being broken in the first place that's a good start it saves you the dispute time of lawyers going back and forth about whether the door is broken or not and then i think it also protects the landlord because the landlord also has to pay their legal fees of hiring a lawyer and then deciding what to repair what isn't if you have evidence of the of the condition of the property before you move in uh it's a good it's a good starting point and a lot of times just having that in the lease itself it stops a lot of disputes so um um it's something it's something i i don't see put in in a commercial lease but i'm always frustrated and in my experience i just highly recommend it and um and uh if you are thinking about signing a new lease with your landlord or you are a landlord you're thinking about um you know letting your property to a tenant it protects both sides but the other side's been unreasonable and you have some evidence of the other side um either you know the landlord saying the tenant ran the property to the ground or the tenants saying that you know when i had the property it was in this condition in the first place it just really avoids lengthy disputes um lastly i just want to talk about rent review clauses um usually in commercial leases the reason why you can assign them is because they last so long um commercial leases can last anything usually wisely from 12 years to 20 30 years so um it's it's pretty standard that uh what is called a rent review clauses put in every three to five years a new rent usually higher let's face it because of inflation and other reasons um for a new rent to um to to to to to cover the old to replace the deal rent uh usually it's upwards only so that means even if the even if the the market price for the property goes down um it will at least stay at the same amount if the the market for the property goes up the market referral probably goes up it goes up along with it usually what happens is the surveyor will come by and then suggest a price and then both the landlord attendant either agrees to the new price or they have some um arbitration mechanism to figure out how to how to settle a new rent um what i've seen recently just in the last year or two is because of the kernel virus situation um a lot of these three to five year rent review dates by the third to fifth anniversary either the first one the second or so one was being missed because um the sh because either the tenant was not doing business in the first place so it was not become uncounted or become non-contactable or the landlord because because the clinton virus also was not contactable so they both missed the rent review date and just figured we're just going to go along with it and now as the economy reopens what i've been seeing in my litigation work in my dispute work if the landlord comes back and ask for catch-up rent so um let's say the rent review date was missed during the middle of the pandemic when everything's locked down and now one year later the landlord comes back and said well we missed the review date but the rent is actually instead of twenty thousand pounds a year you know it's now twenty thousand twenty three thousand pounds a year and we're gonna have to catch up to the date when you were missed and then you have to pay you know all that extra three thousand pounds of rent um all the way up to today from the miss review date and sadly to tell you um if the lease was written in a way to allow that that's okay the landlord can actually come back and um come back to get you for the revenue review date that you actually missed and if going back if you as a small business owner sometimes you don't have a lot of savings or and then you immediately resident in cash flow problems again and then you just get a dispute and then you're going to have a higher lawyer said well you didn't come to us you didn't you didn't tell us about the interview and the landlord's lawyer are going to say well you know it's written into the lease that if we want to we can go back and ask you for the for the rest review um so um what i recommend again um and i don't see that being done a lot in the uk is having consider having fixed figures rather than having a rental review clause so instead of saying every five years we're going to have a market rental review based on the market price of the property just put in the lease that starting from 2020 we're gonna pay twenty thousand pounds and starting at 2025 we'll pay 23 000 pounds and in 2030 we're going to pay 27 000 pounds now the the the upside of that is that you have a fixed increment so you don't have that random review clause and every five years you're gonna have to renegotiate with your landlord but the downside of that is um it's fixed in so um instead of you know the market price for the commercial property might not go up it might go down it might stay around the same place but since you already signed the lease with with the with the fixed increments being marked in you're always going to have to pay the higher price so you as the new tenant you kind of have to decide whether i want the flexibility of the rental review clause or i want the security of having the fixed figures based on fixed increments so that i know exactly next year what my rent is going to be um lastly i just want to talk about uh just for both assignment of existing leases and the obtaining of a new lease from the landlord some of the searches that i recommend that you do because when you sign a new lease or getting and getting an existing lease you are making a really big commitment to this piece of property and you as the buyer might not necessarily know everything about the property just by going there and looking at it so i just like talked about three different searches that you might want to do and whether i recommend it or not based on some of your circumstances the first search i want to talk about is a local search so basically this is the search that to find out any planning permission or local ordinances that might affect your property um you might say to yourself well it's all public information right i can find premise licenses or planning permissions on the council's website it's all there i can just cycle google i don't need lloyd to do that yes fair enough but the second part is the local ordinances that's part really that really kicks in um so for example i had i had a client um who's gonna gonna purchase a barbecue shop um a restaurant that does barbecues um there's nothing in planning permission about smoke coming out from the barbecue restaurant but there was a lot there was a local ordinance in the borough he's in so his ordinance is a piece of legislation by the by the council it's not in the planning permission that's attached to the property that basically said uh based on the clean year act of 1954 in our in our borough we don't allow excessive smoke coming out from your property and potentially we can shut down your barbecue restaurant because your barbecue restaurant have produced a lot of smoke so um if you don't do those searches and then you suddenly buy a buy a property i'm thinking you're gonna open a new um open a new barbecue restaurant that you can't you might have to open a different restaurant that's not your forte and then you just sign the 30-year commercial lease so that's one of the reasons why i really think doing local searches for any commercial property is really important either for granting a new lease or a for lease assignment the second search i like to talk about is a flooding search um so these are searches that sort of gives you a report on how prone to flooding your property is um again all these searches i talk about you don't have to do it um you can enter into any contract you like or any at least you like without doing any structures at all these are not mandatory requirements these are just my recommendations um if you're if you're pretty sure your property is on top of a hill good go ahead you don't have to do a flooding search but if you have any if you have any if you have any sort of any hint of content that you your property is in a low-lying area this is a search that i recommend um you might say to yourself um if the if there's insurance for the property that's getting fixed anyway why do i have to do the search and waste my money well um usually commercial insurance only covers the the repair of the property itself it doesn't cover for any loss of business so the landlord might be happy you know the landlord goes all right my property's covered even's flooded uh my insurance covers any um any any any damages done to flooding um but what in my does not cover is um your laws of business so you might um sorry yes so um so you might have to close down your business during the time when the property is being fixed and if you don't have the cash flow um you again you might run into problems with your small business because you don't have the cushion built in as uh small businesses don't so it's important to find out what your risks are uh before you sign a piece of paper saying that you're willing to enter into a commercial lease for 30 years and uh once you find out at least you know the risk you know it's gonna get flooded once in a while and you might want to buy insurance that covers the loss of business as resulting from flooding lastly i want to talk about sewage searches so these are searches where it shows you whether there are any utility any utility pipes that runs under your property because under uk law if you build an extension if you build any structural prop if you do any structural things onto your onto your property that covers these uh pipes um and when if the if the utility companies have to repair the pipes they actually have the power to demolish any extension that you build and just to access the price for repair um usually it's not a search i recommend because i find it highly unlikely when you sign a 10-year 20-year commercial lease that you're going to add structures to your property um unless you do which and sometimes you do so if you are planning on let's say build an outhouse 10 meters into your garden and it's quite important to find out whether there are any pipes that's under the 10 meters you'll build into the garden because let's say you spend hundreds of thousands of pounds doing structural work to the property and two years later you know they have to fix the pipes and the utility company comes and demolishes your little outhouse that's potentially a lot of liability um that you might have to do but if you are not considering um building onto or making any structural work to your to your commercial property that you are tended off then it's not a search i recommend but just so you know um this is not the only search you have to do if you want to do any structural work to your commercial property ask your landlord for permission first i would recommend that and consider any planning permission that you might have to apply for as well that covers all the main content that i'll talk about today just as a reminder we have our free app mobile app it's available on iphone and android you can see all the information about it on your screen now we also we also have a social media presence we are on facebook we are on twitter instagram linkedin youtube if you ever want any free legal knowledge and updates to our events um if you have any questions feel free to write them into the chat section of the meeting or potentially also you can unmute and talk to me as well so wait for about 30 seconds to about a minute if you have any questions feel free to um write into the um the chat box and uh i'll do my best to answer your questions hello can you hear me yes i can and can you talk about the is it there's a current um ban on evictions for commercial tenants i beg your pardon is is there a current ban on evictions for commercial tenants due to covid um i'm aware of the current um yes but i think that passed as of last week as of last month from the stamp duty holiday i could be wrong um i had a i had a case where the commercial the commercial lease was disclaimed so the lease no longer existed so the the commercial the the former tenant became a squatter so i did a little research into whether the moratorium applied to uh squatters as well but um as of my last i could be wrong so i don't want to give any wrong information but as of as of um as of my as my knowledge i think that moratorium might have expired as of 30 of last last month unless the unless the the unless the government has decided to extend it uh one more thing um so if a leaseholder hasn't paid their rent and things like that does that mean that the lease uh is now over and if we're to uh sort of take the property back it would be a new lease um right so um so first thing we have to determine is a in the lease what does it say um but to answer your second question yes if the release is dead um the landlord has what is called reversion reversion means that the leasehold merges back into the freehold and the lease is gone and but certain conditions would have to be met for that to happen simply by missing rent for let's say a month or two in my experience in a vast majority of leases that's been drafted that's not the case thank you usually there are a lot of protections that's been built into the lease itself as well as the rent deposit deed to protect both the landlord from damages as well as protecting the tenant from just at least disappearing overnight is there any other question from any of my audiences um i have prepared i've prepared some common um questions that some of my clients have had that um that ran to multiple times um the first one is um what is the risk for guarantor uh to act uh for the new uh to act as a new tenant to go into the tenancy um usually um so um the guarantor asks as a guarantee if there's any rent arrest or if there are any um damages being done to the property but in my experience it's quite safe to ask the guarantor because the landlord will have to exhaust all options most reasonable options against the the tenant before they can go after guarantor so sometimes i you know sometimes i talk to people and uh they are having problems look um you know especially first-time entrepreneurs looking for guarantor because the guarantor's thinking this is basically unlimited liability uh for me and i always tell the i always tell the the the the new first boundaries um terror guarantor it's not gonna be a huge problem because the landlord is legally obligated to go after you first with all reasonable methods before the guarantor you know the has on the block so to speak um the second question that i was asked for um with regards to a new lease is how much is the um the stamp duty and um so um as some of you some of you might be aware that um if you buy a free hold um or like a long one of those long resource the the the step duty is um anything above 12 000 um 135 000 so it's the same amount but to to calculate that amount what they do is what is called they calculate the net present value of this leases being created as of today the day of completion so what i'll do is they'll take him to factor of the all the rent that's been paid uh over the over the amount of years the um as well as the premium that's been um being paid for for the lease itself they will um put in the calculator figure out what's the net present value and uh charge an sdlt based on that so your the step duty will be based on how long your rent is how long how long is the term of the release what is the at least the first five years of rent and um how much you paid to buy the lease um the third question i was asked especially in the beginning of at least assignment is when do the landlord's requirements for simon becomes unreasonable this is this is a legal gray area because it's a it's a it's unreasonability test and references and business plans and just to find out who you are those are definitely reasonable requirements um i've some experiences when it gets to a point where the landlords just start us for unreasonable things like a year's worth of deposit that's quite a risk that's pretty unreasonable um or they might ask for uh documents um references that they expect many years that you can just just can't find or even this business plan itself you know sometimes you provide a business plan it's clearly good enough uh you can you can show that you know the the the the cash flow covers the outgoings but the landlord said it's not good enough business plan i want a more detailed business plan and um preparing a business plan um asking how to do that costs money so um if you ask for something that's way too detailed that's clearly sort of an overkill for for the for the thing itself um that becomes unreasonable but what i find is and this is a problem for the first five entrepreneurs especially is that even if it becomes unreasonable uh your recourse to justice is actually quite low because um because like what are you gonna do are you gonna are gonna are you gonna i'm gonna sue the landlord for like unreasonably deny your your lease assignment uh it's really hard to prove damages because um because you don't know what you're especially as a first-time entrepreneur you don't know how much money you lost as a result of that unreasonability and um and the legal process just take a very long time as well so litigation over this issue unless it's a really big transaction uh usually um doesn't result in um doesn't result in a very satisfying um outcome for for the for the followers id um well thank you today for um attending our webinar uh hopefully we'll be having more of these free events like this in the future both from me as well as um any other any other members of our team um i hope you have a very good day and you have learnt something and um from uh from from this experience and um if you are starting a new business i hope you all the best um if you think are thinking about selling your business as well i hope my um i hope my um i hope my my um my uh my webinar helped out as well um to help you have a more smoother process and uh thank you very much for attending it's been a pleasure and i hope really hope to see you again you