Free-of-tie leases demand continues

By Stephen Taylor

- Last updated on GMT

Free-of-tie leases demand continues

Related tags: Renting, Leasehold estate

Stephen Taylor, MD of Guy Simmonds, takes us through his 2016 predictions for the leasehold market.

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Private free-of-tie leases have been in exceptional demand in 2015 and we already have a waiting list of clients for purchases moving into 2016. There has also been an influx of commercial buy-to-let investors, in addition to retiring freeholder landlords, which, I’d say, shows this sector is even more buoyant than it has been in the past couple of years. I predict this will continue throughout next year.

The caveat will be that rent is pragmatic and the lease sustainable. There are many agents out there who put unrealistic rentals and premium on their properties and that’s not the way forward for landlord or tenant — you’ve got to be fair to both parties. For longevity in the market, landlords must always relate to the actual declared profits achieved in the accounts.

As a result of this, we have recently been advising certain pubcos on their rent levels. Interestingly, they are proving to be more receptive than before. It’s in everybody’s interest for operators to be successful in the long term so rents must be sustainable, realistic and relate to the actual turnover that’s being achieved in the outlet.

In the past, we have feared that landlords were operating with ambitious rental figures but the proof is in the pudding and market forces are dictating a positive change.

Elsewhere, the freehold market has lifted off for us in 2015 and is much more buoyant than previously envisaged. We believe this is also impacting on the number of free-of-ties because of a three-tier freehold market: there are companies looking to buy for change of use, there are those looking to operate and there are private investors looking to create free-of-tie leases. That’s the perfect synergy and I would say shows the market is looking very good going into next year.

Where tied leases are concerned, there is a degree of uncertainty that’s crept into the market with regards to the MRO. Uncertainty delays transactions and can negate them, something we fear is set to continue in 2016 and are actively trying to address.

A big thing for us in 2016 will be addressing this issue so the market continues to move forward.

Through our specialist helpline, we are actively encouraging purchasers and vendors to contact us so we can advise on their rights under Landlord & Tenant Act 1954, especially rights of renewal. It’s very much in the back of everybody’s minds at present and, as our job is to facilitate transactions, we’re doing more and more through our advisory service to put people’s minds at rest.

Our main advice is for tenants to seek professional advice now so you are sure of your rights.

Related topics: Property law

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