A Pocket Guide to Lease Transactions

A Pocket Guide to Lease Transactions

This booklet will give you an overview on a leasing transaction involved in acquiring commercial property in the UK.

The process can be lengthy and on occasions complex however it will be necessary and essential to instruct solicitors at an early stage to avoid certain pitfalls.

This is not a full interpretation of the law, but rather a checklist of the major issues you should be aware of.

Basic Understanding of Leasehold Property in the UK

In England and Wales there are two ways in which a property can be held, freehold and leasehold. A freehold interest means owning the property outright. A leasehold interest means an interest granted by a landlord to a tenant for a defined period of time, usually in return for a payment of rent. The document that governs the relationship between a landlord and tenant is known as a lease.

Office space is usually offered for lease rather than freehold sale. The vast majority of commercial properties are held under leases ranging from 12 months to 99 years.

Headleases and Underleases

A headlease is a lease granted out of the freehold and an underlease is one granted out of a headlease.

There may be any number of underleases (sometimes described as sub-underleases, sub-sub-underleases and so on), but each underlease must expire before the one out of which it is granted.

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