For charities, the right property can be vital to delivering services and supporting beneficiaries and the community. However, lease terms can have a significant impact on costs, flexibility and day-to-day operations. Once a suitable property is found, a charity will then need to negotiate the lease terms.
Isabel Murton, a solicitor in Willans LLP’s real estate team highlights some of the most common leasehold property issues to watch out for.
Repair responsibilities
The repair obligations in a lease are often more extensive than charities anticipate. The costs of repair and maintenance, as well as dilapidations claims at the end of a lease can put significant pressure on budgets. Therefore, it is key to understand the extent of the repair obligations before the lease is agreed.
Service charges
Service charges can be a significant expense which can be difficult to predict. Therefore, during a lease negotiation the service costs and any exclusions or limitations should be clearly agreed to help avoid unexpected costs and make budgeting easier.
Restrictions on use
The lease must allow the property to be used for the charity’s intended activities and ensure that this proposed use complies with the planning requirements.
Alterations
Many charities need to alter a property to help achieve their charitable purposes. It will be crucial to determine whether these alterations can be made and if the landlord’s consent will be required before the lease is entered into and the charity is committed to the property. Restrictions on alterations can affect a charity's ability to make full use of the premises.
Energy efficiency and sustainability
Sustainability and energy efficiency are becoming greater priorities across the property sector. Charities should consider the condition and efficiency of a property before taking on a lease and understand who is responsible for any upgrades. This can help avoid unexpected expenditure during the lease term.
Informal arrangements
Historically, many charities and not-for-profit organisations have occupied properties under informal arrangements. However, this can make it unclear who is responsible for repairs, insurance and maintenance which can result in disputes. Having a properly documented lease can help provide certainty for everyone involved.
Want to know more? Sign up for our webinar ‘Understanding leasehold property’
In this session, you’ll hear from Willans’ real estate team as they explore how a lease can affect far more than simply where an organisation operates.
Willans’ experts will explain how commercial leases work, what costs and responsibilities charities typically take on, and where problems most commonly arise. The session will also explore some practical scenarios charities may face, such as repairs, carrying out alterations, sharing space and ending a lease, and offer guidance on how to manage these issues effectively.
The aim of the webinar is to help charities make informed decisions, avoid common pitfalls, and understand when and where to get help before problems escalate. Register to attend on the link below.