How have the terms in English commercial leases adapted in the last few years – ‘Conclusions’

In my previous articles, I commented about the changes I have noticed in the terms that are being incorporated in the leases that I am currently reading. I’ve made it clear from the start that my thoughts are based on what I am seeing, rather than a scientific analysis across the whole property sector. I read between 500-1000 leases each year and whilst this is a relatively small sample, it is interesting to note that the trends are common across many of the documents.

I think it is fair to say that the terms being incorporated favour the tenants rather than the landlord. I don’t think this is much of a surprise when we consider the concerns for the high street and offices in general when we reflect on the lockdowns during the pandemic. Indeed, what I was more surprised with was that I didn’t see more surrenders or tenants vacating their premises, it seemed a temporary restructuring of the rent terms was the preferred and most sensible option.

One area that surprises me, and it really shouldn’t, is the reduction in parties seeking protection under The 1954 Act. In the past protection under The Act was largely for the benefit of the tenant who was occupying under a longer term, and it was not clear what 25 years in the future held. Today, with shorter terms, it seems that both landlord and tenant seem more relaxed about the implications of contracting out.

The property market is always evolving and changing, and commercial and residential leases will always reflect the market conditions. The traditional commercial lease has I believe changed as a result of outside pressures, not least the proliferation of serviced offices, which offer flexible terms and conditions. It will be interesting to see how a lease will look in 5 years in view of the energy and cost of living crisis we are currently experiencing. It will certainly continue to keep pace.