Christmas trading – implications for landlords and tenants
Retail, leisure, and hospitality businesses will be banking on a good festive season this year. Shops will want to stay open for longer and may want to add to their usual offers, to attract as much footfall as possible. Landlords with empty units will be looking for opportunities to fill them with festive traders and attractions to recapture the feel of a vibrant destination for shopping, socialising, and celebration. The key to making all this a success is to get good legal advice as early as possible, to head off any potential problems before they arise.
Christmas is traditionally the season of goodwill, but commercial landlords and tenants need to be careful,’ according to Zahra Qureshi , a Solicitor in the commercial property team with Ingram Winter Green LLP. ‘If Tenants are trying to do something a bit different from normal, they risk accidentally breaching their lease or causing a nuisance.’
Asking your solicitor to check that your proposals are within the terms of your lease should stop you ending up in a dispute with your landlord or tenant.
Extended hours
The first thing many business tenants will think about is longer trading hours. How much freedom there is to extend trading hours depends in part on where the property is. It will be easiest in places like a town centre, where landlords and tenants are able to work together with local authorities and traders’ associations to organise seasonal events, combining late trading with entertainment. Where the local authority is not actively promoting late trading, it is important to check for any local restrictions on trading hours. These may have been set out in the planning permission for the current use of the property and your solicitor will be able to advise you. If trading hours have been formally extended to help businesses recover from the effects of Covid, you should check to make sure that any relevant extension is still in force.
Even if the local authority is not promoting any seasonal events, landlords of shopping centres and retail parks may decide to do something similar. Again, it is important for landlords to check for any restrictions on trading hours in the planning permission for the development before going ahead. Landlords who hold their property under a lease should also get their solicitor to check for any restrictions on use and hours in that superior lease.
If an individual tenant wants to trade for longer than usual without there being any promotional event, your solicitor can check the lease for any limits on trading hours and, if necessary, apply to the landlord for permission.
Temporary activities
The same applies if a tenant wants to do something which is not part of the normal use of the premises, such as offering temporary catering or entertainment, or putting tables and chairs outside. The lease will set out what a tenant is permitted to do and will also have a list of prohibited activities and, if no one checks the lease first, the tenant could be in breach. Anything involving food and drink will also involve extra health and safety obligations and may require a licence from the local authority.
Temporary licence to occupy
Landlords with empty units may look to attract festive traders and attractions on a temporary basis under a short-term licence to occupy. It is important for landlords to consult their solicitor before entering into any temporary arrangements which allow for short term occupation because if the document setting out the temporary arrangement is not correctly drafted, this may inadvertently provide the party occupying the unit with what is known as “security of tenure” thereby converting their temporary licence to occupy into a lease by the back door.
Interfering with others
Landlords and tenants should both think carefully about whether promotional events, extended hours or temporary uses will cause a nuisance to other nearby businesses and, where relevant, residents. From a legal point of view, this could be a public nuisance, for example if pavements or public highways are blocked; or a private nuisance which interferes with someone else’s use of their own property. This might happen if one tenant’s customers spread out in a way that blocks access to another tenant’s property or even just makes it more difficult. Loud music, strong smells and litter could all cause a nuisance. Landlords of shopping parades and centres should be very careful about this because, even where the nuisance is caused by a tenant, the landlord could be liable to other nearby tenants for not taking action to stop the activity causing the problem. If a commercial tenant is badly affected by another tenant’s activities, their solicitor will be able to help them to get the landlord to take action.
Additional costs
Christmas always comes at a cost and landlords and tenants will want to be clear about who will pay for seasonal displays, decorations, and attractions, such as live music.
Landlords will want to recover as much as possible from their tenants through the service charge, so it is important to check what the service charge provisions in the lease say. Modern leases of units in shopping centres will often deal specifically with the cost of decorations and dedicated events but older leases may not, so there will probably be some legal debate between the landlord and tenant. Some leases may expressly prevent the landlord from recovering the cost of promotional activity, which could come as an unpleasant surprise if the landlord has not checked with a solicitor before going ahead.
Staying safe
Everyone who owns and occupies commercial property must be aware of health and safety matters and it is important to remember to include fire and general risk assessments when planning seasonal activities. Aside from bad publicity if anything goes wrong, landlords and tenants will also want to avoid any dispute with the insurers of the property if there is any damage. Insurance policies should be checked, because they will contain detailed provisions about what is covered and what might invalidate the policy.
How we can help
Well-planned seasonal promotions could help landlords and tenants end the year on a brighter note. There are some possible legal pitfalls, but some time spent talking to your solicitor early on should make sure you know how to avoid them and get the best out of the festive season.
For further information, please contact Zahra Qureshi in the commercial property team on 020 7845 7845 or email zahraqureshi@iwg.co.uk. Ingram Winter Green LLP has offices in London and advises on transactions nationwide.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.