Giggling squid open their 42nd restaurant
Partner Stephanie Kierans helped Giggling Squid open their 42nd restaurant, situated right in the centre of Welwyn Garden City.
Giggling Squid is thai food with personality and a firm favourite for Team Sherrards.
Founded by husband and wife Pranee and Andrew Laurillard, Giggling Squid opened its first restaurant in 2002 in Brighton, but despite the recent difficult period for all in the hospitality industry, the restaurant chain continues to push ahead with their expansion plans opening beautiful restaurants all over the UK.
Seven Dials welcomes WatchHouse Coffee
Charles Hodder, partner in the Commercial property team worked alongside the London Corporate and Commercial team to assist WatchHouse with the opening their ninth specialist coffee shop which boasts state of the art coffee technology including a Slayer Steam LPx and full brunch service seven days a week.
Sherrards are delighted to continue to support Watchhouse as their vision continues to grow.
You can read more about WatchHouse by clicking here.
Sherrards retail team work with client Evapo expand and explore new business ventures
During the course of the last calendar year Stephanie and the team have advised Evapo on the renewal of three leases; the strategic re-gearing of two further leases and the acquisition of three new units. This is typical of the type of work the commercial property team carry out for a number or retail clients.
The team are also now working with the owners of the company in connection with a new business venture and we have concluded the first, of what we hope will be many, acquisitions of premises for the new concept.
Jamaica Blue opens new coffee shop and café at Kings Walk Gloucester
Jamaica Blue offers coffee made with beans from the Jamaican Blue Mountains along with a contemporary menu featuring classic dishes with a twist using the fresh locally sourced ingredients as well as a range of vegan and vegetarian options, and not forgetting the café’s famous big brekkie!
The store opening came just in time for the festive period for shoppers to enjoy.
To find out more, please contact Terry Fendt.
Rent Reviews: Not to be disregarded
A landlord can only conduct a rent review if there is a rental review provision in the lease. In modern leases, rent reviews are around every three to five years.
Negotiations over rent clauses are crucial because the landlord will have a different objective to the tenant as the provisions often only allow for increases in rent. It is very rare that the provision allows for a decrease in rent and so at the time of review, the rent will either stay the same or increase.
When the time comes for rent to be reviewed, the process can be instigated by notice (in writing) or by parties entering into negotiations. However it is clearly in both parties’ interest to negotiate a new rent and resolve any dispute early on to avoid incurring unnecessary time and costs. Tenants should remember that often rent reviews can be backdated.
The most common type of rent review falls under the umbrella of open market rent reviews – the rent at which the premises might reasonably be expected to let at in the open market. It enables rent to be set according to market conditions at the time of conducting the review (on par with other rents being charged on similar properties in similar areas at the best rate).
How is open market assessed?
Usually an expert assists in helping both parties and more often than not they will appoint a surveyor to decide on the open market rent and help them with negotiations.
The surveyor will determine the value of the new rent in the fairest way, by considering the ‘hypothetical lease’ basing it on assumptions and disregards. The reason for this is that if the surveyor valued the open market rent based on the actual property it may lead to an unfair valuation (say, if the property was in a state of disrepair because the tenant failed to comply with covenants relating to repairs), so the assumption would be made that the tenant has complied with all covenants. Certain aspects will also be disregarded, for example, if the tenant has built up a good rapport with neighbours or if the tenant has made significant improvements to the property, these can be disregarded to give a general unbiased valuation.
To minimise potential risks, it is strongly advised that both landlord and tenant seek professional legal advice to ensure they are fully aware of the rent review provisions of the lease.
After a valuation has been provided to both parties, hopefully they will agree. If this is not the case and parties cannot come to agree a new rent, the rent review clause in the lease usually stipulates a procedure for alternative dispute resolution (ADR) which involves the use of a neutral third party.
If negotiations fail, parties then often look to arbitration where a neutral party comes in to actually resolve the dispute and make a decision, requiring both parties to comply with the final outcome.
The rent continues to be paid at the old rate until a new figure has been agreed. Once the new amount is agreed, it can be back dated to the review date meaning that an additional sum making up the difference may be owed by the tenant, and interest may also be charge
To find out more, click here to speak to Michael Lewis.
Licences for occupation – is your short term licence agreement actually a formal tenancy?
A recent ruling is likely to have significant consequences for guardian property companies (and other landlords) who use licence agreements to place occupiers into properties to protect against squatters and vandalism. The case of Camelot Property Management Limited and Camelot Guardian Management Limited v Roynon  highlights the importance of carrying through in practice what a document/ licence has set out to achieve.
The matter of whether a licence is really a licence or indeed a lease has long been debated and for some time now it has been widely accepted (following the decision in Street v Mountford ) that the principles of exclusive possession, rent and length of term govern how a ‘licence’ will be regarded by the courts.
The recent Camelot case did not set to change these principles but has offered valuable insight as to what is required in order to prevent ‘exclusive possession’ from arising and turning a ‘licence’ into a lease or formal tenancy.
The ‘licence’ agreement with Mr Roynon for the occupation of two rooms in a former old people’s care home contained the following restrictions:
- No overnight guests
- No unsupervised guests
- No more than 2 guests at a time
- All guests to be escorted from the property at the end of each visit
The court held that the provisions of the agreement did not accurately reflect what happened in reality. Whilst the licence stated that no exclusive possession would be given, Mr Roynon had in fact been given keys to two rooms to which no other guardians had access and which no one entered without his permission.
Regular inspections of the rooms by Camelot were not held to be sufficient to counter his exclusive possession and Mr Roynon had therefore acquired an assured shorthold tenancy rather than a ‘licence to occupy’.
The case highlights the need to put into practice what a document/ licence has set out to achieve and where no exclusive possession is intended, landlord’s must make sure that the living arrangements are not contrary to the formal agreements put in place.
Anyone using guardians or short term occupiers to prevent buildings remaining empty should carefully balance the risks of allowing people into occupation with the rise of professional squatters and other unwanted occupiers who could look to take advantage of such situations.
Contact Caroline for more information.
Testing times: Practical tips commercial landlords should consider when granting a lease
Sterling is weak and Brexit is lingering. Business uncertainty, particularly the risk of tenant insolvency, is undoubtedly one of the biggest concerns for UK commercial landlords in the current climate. 2018 has seen increasing indicators of stress and change in the retail and restaurant sectors in particular, with tenants entering into CVA’s (company voluntary arrangements), administration & negotiating store closures.
All is not doom and gloom – indeed some report that we are seeing an evolution of the “store” and the high street which may present its own opportunities. Whatever the weather, projecting ahead to what are likely to be testing times, commercial landlords might want to consider how better to safeguard their position on grant of leases, going forward.
Here are our top tips:
1. Heads of Terms
Negotiating and agreeing heads of terms is a critical time in any transaction. Getting lawyers involved at this stage can put the landlord in good stead for covering key matters relating to the specific circumstances of the parties, the property and the transaction. Getting it right at this stage often avoids the need for renegotiation later down the line which can carry the risk of a ‘no deal’ and wasted costs.
- Rent Deposit
Quite routinely, a landlord will collect a lump sum as security from the tenant on the grant of a lease which is held for the duration of the term. It can be used by the landlord to cover any unpaid rent or damage to the property caused by the tenant. There are various ways to hold a rent deposit but a landlord faced with the increased risk of tenant insolvency will want to consider a requirement for the rent deposit to be held using a charge structure. Using a charge structure means the landlord will be a secured creditor (of the rent deposit sum) in the event the tenant becomes insolvent (such as falling into administration, liquidation, or entering into a CVA).
If a charge structure is not used, there can be greater restrictions on whether and how commercial landlords can draw down and use the rent deposit sum, where valid, if the tenant becomes insolvent.
Of course, the other consideration to factor in is the amount of deposit that will be taken. Depending on the financial strength of the tenant and the term of the lease, a landlord will want to negotiate an amount which is an adequate security buffer – and preferably hold that under a charge structure.
Landlords will often, as additional security, require a guarantee from (1) a personal guarantor or (2) a parent company so that there is a further party to pursue if the tenant breaches the lease. A tenant who is in financial difficulty might fail to pay rent or fail to comply with its repair obligations, leaving a dilapidations liability. In this situation a landlord can often be left with an immediate cashflow problem. Furthermore, long term, if the property is significantly damaged or dilapidated, the landlord could be left out of pocket. Having other parties of financial worth to pursue is essential.
To a commercial landlords dismay, some insolvency procedures can affect enforceability against a guarantor. CVA’s have been criticised for “guarantee stripping” as case law has left some uncertainty as to whether these can operate to release guarantors of their liability owed to landlords (based on terms agreed in a CVA between an insolvent tenant and its creditors which can bind the landlord).
For the avoidance of doubt, landlords should be mindful to ensure that any guarantees taken are on the basis that they will expressly apply in the event that a CVA or any other voluntary arrangement is agreed by the tenant with its creditors.
Whilst there is no guarantee that this will be airtight – as the point in case law remains somewhat uncertain – having clarity of what the parties intend in an agreement is essential and is more likely to help protect the landlord. Generally speaking, it is important that the guarantees the commercial landlord takes are drafted to maximise strength.
- Contracting-Out of Renewal Rights
A tenant who has a lease for a term of at least 6 months (or a tenancy without any fixed term) in occupation and operating its business at the property has a statutory right to apply for a renewal of its lease on similar terms. A landlord can only refuse to grant a lease renewal on certain statutory grounds.
If a tenant is financially strapped when it comes to the end of the fixed term, rather than allow a renewal of the lease and have problems trying to evict the tenant, a landlord will understandably want a clear right to regain possession of the property so that it can be re-let on the open market again.
This can be achieved by the tenant agreeing to contract-out of its statutory right of renewal. The procedure for contracting-out is specific and must be followed properly before the grant of a lease to be effective. The reward of getting this right can often avoid unnecessary hassle and costs at the end of the term.
5.Existing Leases & Throughout the Term
There might be some tell-tale signs to look out for during the course of a landlord-tenant relationship which can indicate the tenant is in difficulty. A landlord who sees these signs may well need to start proactively thinking of alternative plans.
The obvious one – late payment of rents – is not the only one to look out for. A tenant might make applications for consent to assign, sub-let or change permitted use. A landlord might simply agree to an assignment or subletting if this means rent is coming in from a more financially reliable tenant or undertenant. Alternatively, a landlord might want to consider agreeing a surrender of the lease with the tenant, at a premium. This can allow both parties to cleanly move on.
The key is to achieve a solution before the tenant falls into an insolvency situation as otherwise the landlord can be at risk of little or no return of monies owed, once insolvency rules kick in. Contact Caroline for more information.
Look out for ‘Watch House’ speciality coffee shops
Watch House Coffee started life at a small yet cosy ‘watch house’ on London’s famous Bermondsey Street, historically a shelter for men guarding St Mary Magdalane Church graveyard at night. Further locations followed at a former spice factory near Tower Bridge and on Fetter Lane in the City, where you can enjoy your coffee under its long grass roof and leafy ceiling.
Partner Charles Hodder has been working with Watch House Coffee over the past two years, advising them on their commercial leases; most recently on the Fetter Lane site.
Sherrards helps Rituals with new store openings in Bicester Village and Marylebone High Street
The Sherrards property lawyers have a well-deserved reputation in the retail sector for cutting through the legal jargon and getting the deal done. With ambitions to open 1,000 stores by 2020, Rituals looks to Sherrards to help them secure properties in high end locations in the UK. In addition to new stores in Bicester Village and Marylebone High Street, Sherrards has worked with the Rituals team this year on new openings at London Bridge and Kings Cross stations.
Terry Fendt, who heads up the property team at Sherrards said, “Working with clients in the retail sector is both exciting and challenging. Opening new shops on the high street is pretty rare these days and in the current economic climate, it is great to work with a company that is thriving and expanding.”
Matthew Lee, Head of Store Expansion and Real Estate at Rituals comments “There is a great deal of work behind the scenes before we open a new store. We trust Sherrards because they have a dedicated team of specialists who understand the need for speed, flexibility and determination to navigate through negotiations and achieve the right result for us.”