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Clothes Shop Leases – Tenant Tips - By Chris Bartlett

Over the years, I’ve advised many a tenant looking to take on shop leases. So, I’ve decided to put together some pointers that I’ve found are of special importance to clothes shop leases.

Make sure you consider them carefully before you sign on the dotted line.

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  • Planning Consent – Change of Use
  • Trading Hours
  • Service Charges
  • Security at the End of the Lease
  • Rental Agreement Concessions for Fashion Retailers
The Council strictly police the use to which all buildings are put. You must therefore make sure that you are allowed to use the property you’re looking to rent as a clothes shop. This means that you’ll probably need A1 planning consent, which is use as a retail shop. You should be able to find out some useful information on the current permitted use by getting in touch with the Local Authority’s planning department and/or asking the Landlord.
Tenants of clothes shops often find themselves renting a unit in a development or mall. If so, pay close attention to the hours and days during which you are allowed to trade, both in the lease and under any ‘regulations’ that the Landlord might produce from time to time. If you’re planning to stay open for late night or weekend shopping, you don’t want to find that the shopping centre is locked up at those times and on those days. Check carefully the terms of any planning permission issued by the Council, too. You may find that additional restrictions on trading hours are imposed therein.
If you are planning on taking a lease of part of a building or a unit in a development, always go over the service charge provisions with a toothcomb. In particular, make sure that the Landlord can’t charge you for things you should not be paying for, such as funding a new development or paying for staff and services that you don’t benefit from. Above all, it’s crucial to get the Landlord to agree to cap your service charges, so that you know that, at worst you can’t be asked to pay more than a fixed amount in any one year of the lease term.
What if you want to stay on at the Property after the lease of your clothes shop comes to an end? You might well not want the Landlord to be able to evict you on a whim. It can take years to build up a following at a particular location, so the last thing you might want is for the Landlord to get rid of you. You can reduce the chances of this happening by making sure that you are granted a lease that is protected under the provisions of the Landlord and Tenant Act 1954.
Property companies are coming under increasing pressure to offer their tenants rental agreement concessions, including variable rather than fixed leases, as the ongoing pandemic continues to deter both UK and foreign customers from visiting high street shops and stores.

Fashion retailers are among the worst affected by the ongoing lockdowns and current retail slump. In the US, the major chain Urban Outfitters has called for variable leases, where the level of rent is performance-linked and dependent on turnover, while the owner of Tommy Hilfiger has, along with a number of other major fashion retailers, sought rent relief for its stores.

The owner of London’s Covent Garden market has also begun to offer certain tenants variable leases, which is indicative of the mood among some property companies that there is a need to share the pain with their retail tenants. Other landlords are more resistant to the idea of variable rents, but it may ultimately prove to be the least bad option for them and mutually beneficial.

Many retailers argue that fixed leases are economically unviable in the current climate, as they simply do not know when the next lockdown is going to be imposed or how long it will then last. The fixed costs of being open have also risen due to measures taken by shops and stores to comply with government safety measures.

The debate over fixed or performance-linked leases is not going to go away, and online sales will continue to eat into the footfall and turnover of high street retailers even after the current pandemic ends. Many retailers large and small will be pushing for concessions in their rental agreements, and legal advice may be necessary at any stage.

Our firm advises both landlords and tenants of commercial properties in relation to all aspects of leases, contact us today for a free no obligation quotation.

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Contact James Edwards for a free no obligation quotation today by phone or via our contact form. James is a commercial property solicitor advising landlords and tenants on commercial leases.

James also has experience in buying and selling commercial property. He is friendly and very approachable. James works with Christopher Bartlett, who is an experienced commercial property solicitor working on large development projects.

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