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Commercial Lease - Sublease or Surrender

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  • Commercial Lease - Sublease or Surrender

    Hi
    I own a small commercial property, leased in May 2022 for 3 years, the rent is £19k per annum, lease cost me £2.2k in estate agent fees and £1k in solicitors fees. My tenant told me this week that he no longer need the unit and wants to sublease it. I made T aware he has to sublease it to a sub tenant, pass documents to us and pay legal fees and there will be no change regarding monthly rent he is responsible to pay. There is 19 months on the lease to end. However, I am thinking of another alternative, to pay me compensation and surrender the lease. The question is how much compensation? bearing in mind to find a new tenant today will cost me today £1.5K and £2.5K in solicitor and commercial agent fees. I don't know how long will it take to find a new tenant, last time took 2 months between tenancies. I believe compensation is liable to CGT?
    Any other considerations and inputs are welcome? Thanks
    Last edited by yartin; 26-09-2023, 11:45 PM.

  • #2
    Paying you compensation maybe unaffordable and not an attractive option. He may be able to get more for subletting the unit - and then can take a fee for for managing the sublease.

    regards
    Donna
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    • #3
      Originally posted by donna View Post
      Paying you compensation maybe unaffordable and not an attractive option. He may be able to get more for subletting the unit - and then can take a fee for for managing the sublease.

      regards
      Donna
      Thank you for the reply.

      I think it will be hard for the tenant to sublease the unit with only 18 months left on the lease. I t will take 3-4 months for sub tenant to take over. There won't be much interest in a short lease IMO.

      Can he sub lease for higher rent than he is paying now? I thought he can't

      The compensation I am thinking of is 10-12 months rent, is it reasonable?

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