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The festive season is typically a peak selling season for retailers, and with the challenges facing the High Street, many will be taking every opportunity to maximise their revenue this Christmas.
Property owners and occupiers should consider their lease obligations when planning seasonal trading activities.
Myerson Solicitors' Commercial Property team have set out our top tips below.
Many landlords seek to maximise seasonal income by granting pop-up leases of empty units for use as shops, bars and restaurants.
We have also seen landlords seek to maximise the use of common areas and external space by granting licences for the use of those areas as Christmas markets, fairgrounds, Christmas tree stalls and even ice rinks.
Although granting a licence to occupy may appear to be convenient, a short-term lease, which is contracted out of the security of tenure provisions of the Landlord & Tenant Act 1954, is a safer option for landlords.
Where a landlord enters into an agreement for a lease with a retailer, the agreement may contain a provision that the tenant will not be required to complete the new lease over the festive period (usually between mid-November and the end of January).
This is so that the tenant can focus its efforts on maximising income from its existing stores rather than dealing with a move to (and fit-out of) new premises at an already busy time.
Landlords should make sure that they are aware of any such clauses and think about alternative uses for any empty units over the festive period.
Both owners and occupiers of commercial property should be aware of health and safety matters and include fire and general risk assessments when planning seasonal activities.
Aside from the bad publicity if anything goes wrong, both landlords and tenants will also want to avoid any kind of property dispute with the insurers of the premises, if there is any damage caused.
Insurance policies should be checked to ensure that the planned activities won't invalidate the policy.
Landlords should also ensure that tenants have public liability insurance coverage that is appropriate to the activity being carried out from the premises.
Christmas Day is one of the traditional quarter days on which rents fall due.
Landlords should send out rent demands, and tenants should set up payments in plenty of time, as staff may be away from the office between Christmas and New Year.
Some retailers might be on turnover leases.
Turnover reports for tenants on turnover leases are a good indication of which tenants may be struggling financially.
Landlords should be mindful of this and prepare a strategy in the event of any insolvency situations in the New Year.
Landlords and tenants will want clarity about who will pay for seasonal displays, decorations and attractions, such as live music.
Landlords should check whether these costs are recoverable from their tenants through the service charge.
Whilst most modern leases of units in shopping centres will include the costs of marketing and promotions in the service charge budget, some older leases may not.
In addition, some tenants might enjoy service charge caps or exclusions.
Landlords should check that they are not going to end up with a shortfall in service charges.
Commercial leases usually include restrictions on what the tenant can do from the premises.
If tenants want to do something that is not part of the normal use of the premises, such as offering temporary catering or entertainment or putting tables and chairs outside, they should first check that these activities are permitted by their lease.
Activities involving food and drink may require a licence from the local authority, and there will be additional health and safety requirements to comply with.
Similarly, if the tenant wishes to put up additional or special signage at the premises over the Christmas period, then the landlord's consent may be required under the lease terms.
Tenants should also consider whether planning permission or any other consent is required.
If you need professional legal advice with any of the matters discussed in this article, please contact Myerson Solicitors' Commercial Property Solicitors on:
Joanne has over 20 years of experience acting as a Commercial Property solicitor. Joanne has specialist expertise in commercial property matters, including acquisitions and disposals of business premises, commercial leases (acting for both landlord and tenant) and secured lending.
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