The dangers of informal lettings for commercial property

katie-hall-photo.jpg

Informal commercial property lettings arise where there is no written agreement between the parties. This often happens when a landlord rents property to a business contact, friend or family member, or if the intention is for the arrangement to be short-term.

Solicitor Katie Hall from Woodcocks Haworth and Nuttall’s commercial property team explores some of the main risks associated with letting commercial property on an informal basis.

Responsibilities 

These situations sometimes arise when a landlord either doesn’t want to incur solicitors’ fees for putting an agreement together or feels a written agreement doesn’t seem necessary because of their relationship with the tenant.

The important question to ask is, what happens if something goes wrong? For example, what can be done if the tenant doesn’t pay their rent on time, or who is responsible for repairing the property?

With a written lease, the responsibilities of each party are clearly stated. This removes any uncertainty and avoids awkward conversations about what each party’s responsibilities are when there is nothing in writing. Matters such as insurance, repairs and paying for outgoings can often become matters of dispute without a written lease

Security of tenure

Commercial tenants running a business from a rented commercial property automatically have rights under the Landlord and Tenant Act 1954. These rights are known as security of tenure.

The rules mean that at the end of their lease, a business tenant has the right to a new lease upon similar terms to their current lease, meaning that they are legally entitled to remain at the property. It is possible to exclude these rights, but a strict procedure must be followed.

This is a significant risk for a landlord with an informal letting, as what was intended to be a short-term agreement can result in the tenant acquiring the right to remain at the property. It can then be very difficult for a landlord to retake possession.

Rent

Whether you are a landlord or a tenant, rent is a key factor to consider when renting commercial property. With an informal agreement, details such as rental increases and implications for non-payment of rent are often overlooked.

As a landlord, receiving rent is crucial to ensure that your investment is generating funds. A written lease clearly documents how much rent is paid, how and when the rent will be increased, as well as setting out your rights if the tenant fails to pay their rent.

As a tenant, rent is equally important, as it can be a factor that determines how profitable your business is. Without a written agreement, it can be difficult to dispute a rental increase.

Watertight agreements

The importance of having a written lease prepared by a solicitor cannot be understated. It is likely to save a significant amount of time and money in the future by mitigating a plethora of potential risks associated with renting commercial properties on an informal basis.

Whether you are a landlord or a tenant, this is a complex area of law that can have significant implications to both yourself and your business.

Katie Hall is a solicitor based at WHN’s Blackburn office. Katie specialises in commercial property transactions and advises clients on all aspects of commercial property law, including lease arrangements for commercial buildings.

Katie has vast experience acting on behalf both landlords and tenants including individuals, companies, partnerships and pension funds in leasing commercial property, and can guide you through the whole legal process. To contact Katie, call her on 01254 272640 or email [email protected]

Enjoyed this? Read more from Woodcocks Haworth & Nuttall Solicitors

Latest news

1

Major shareholder makes Inspired takeover bid inspired-500x500.png

Major shareholder makes Inspired takeover bid

23 Apr 2025

2

Nominate your favourite family-run business in Lancashire. Thompsons meeting (1).png.png

Nominate your favourite family-run business in Lancashire.

22 Apr 2025

3

Business academies to continue for an additional year Cllr Mark Smith (r) with Top Gun Tools & Fixings team presenting Blackpool Net Zero Academy certificate

Business academies to continue for an additional year

22 Apr 2025

4

Napthens advises A Lamb Associates (ALA) and subsidiary Morham & Brotchie Partnership on their acquisition by Hawkins & Associates Richard Robinson Feat IMG

Napthens advises A Lamb Associates (ALA) and subsidiary Morham & Brotchie Partnership on their acquisition by Hawkins & Associates

22 Apr 2025

5

Six promotions at Farleys Solicitors Promotions at Farleys Solicitors

Six promotions at Farleys Solicitors

22 Apr 2025

Pc Prestonmacan Gif980x120 March
Background image for hub sign up block

LBV Hub

Leverage Lancashire Business View platforms

Post your news
Post your events
Post your offers
Build your network
Improve your SEO
Gain coverage in the magazine
Sign-up
Events
LBV122 May/June Launch Event
121 Lancashire Business View Magazine Launch
Networking
21 May 2025

LBV122 May/June Launch Event

Lancaster and Morecambe College, Lancaster, LA1 2TY

08:30 - 10:30

Sub36 Networking
Networking
11 Jun 2025

Sub36 Networking

British Jewellery School, Scorton, PR3 1BA

15:00 - 17:00

Lancashire Net Zero Carbon Conference
Net Zero Carbon Social 1200px 2
Networking
18 Jun 2025

Lancashire Net Zero Carbon Conference

Crow Wood Hotel & Spa Resort, Burnley, BB12 0RT

08:30 - 13:00

Lancashire Built Environment Conference 2025
BEC 315 X 315 Px
Networking
25 Sep 2025

Lancashire Built Environment Conference 2025

Blackpool Football Club, Blackpool, FY1 6HX

08:30 - 13:00

CMI Level 5 Management and Leadership Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Management and Leadership Course

Preston Campus, Preston , PR1 2HE

09:00 - 17:00

CMI Level 5 Project Management Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Project Management Course

Preston Campus, Preston, PR1 2HE

08:00 - 17:00

RISE - The Academy for Female Leaders and Managers
WENDY BOWERS RISE Illustrstion copy.jpg.jpg
LBV Hub Seminars
02 Apr 2025 - 08 Oct 2025

RISE - The Academy for Female Leaders and Managers

East Lancashire Chamber of Commerce, Clayton le Moors, BB5 5JR

09:00 - 15:30

The Business Network Central & East Lancashire
LBV Hub Networking
24 Apr 2025 - 24 Apr 2025

The Business Network Central & East Lancashire

Stanley House, Blackburn, BB2 7NP

11:30 - 14:15

Preston Freelancer Meet-Up: April
1.png.png
LBV Hub Networking
25 Apr 2025 - 25 Apr 2025

Preston Freelancer Meet-Up: April

Society1, Coworking Space, Preston, PR1 3LT

10:00 - 11:30

People Power: Exclusive Event Series
Stay ahead in 2025.jpg.jpg
LBV Hub Seminars
29 Apr 2025 - 29 Apr 2025

People Power: Exclusive Event Series

People's History Museum, Manchester, M3 3ER

17:00 - 21:00

Planning for the future + navigating Inheritance Tax changes
Planning for the future + navigating Inheritance Tax changes for website.png.png
LBV Hub Seminars
01 May 2025 - 01 May 2025

Planning for the future + navigating Inheritance Tax changes

Stanley House Hotel, Mellor, Blackburn, BB2 7NP, Blackburn, BB2 7NP

08:00 - 10:30

A night at the races
1.png.png
LBV Hub Dinners / Balls
02 May 2025 - 02 May 2025

A night at the races

Morecambe FC, Morecambe, LA4 4TB

19:00 - 23:59

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more Lbv121 Online Graphic
Subscribe now

Weekly news bulletin