Ground Lease Advice

A significant number of commercial properties are held on a ground lease, usually 99-150 year terms, rather than on a freehold basis

Important lease terms to consider include:

  • Rent review – ground leases are often subject to a rent which is reviewed at intervals throughout the lease term.  The rent review clause is typically open to wide-ranging interpretation due to its hypothetical nature. The rent can therefore be set at an artificially low or high level unless properly advised
  • Use – it is important to consider the user clause of a ground lease in terms of restrictions of use and/or the ability to change the use
  • Assignment/Subletting – ground leases permit and/or restrict if the property can be sublet or assigned.
  • Repairing covenants – careful consideration should be given to who is responsible for what level of repairs through the lease term

Hunt & Thorne act for both freeholders and long leaseholders, providing advice on covenant issues, negotiating rent reviews and advising on potential lease re-gears. Lease re-gears have become common place on Swansea Enterprise Park recently due to the fact that the majority of ground leases for commercial property have approximately 60-70 years to expiry. This relatively short unexpired term can present funding complications; therefore one solution is to re-gear the ground lease to provide a new term of 100+ years.

We would be delighted to have an informal discussion to explore how your asset can be enhanced to suit your current and future requirements.

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