Avoid Automatic Lease Renewals: Understanding Tenant Renunciation in Commercial Leases
Many landlords and tenant seek to let property on short term leases of between 12 months and 4 years and 9 months.
The reason the cut-off point of 4 years 9 months is used is because once a tenant is in occupation for more than 5 years they obtain a statutory entitlement to a new long lease of up to 25 years at market rent.
This can be at odds with the landlord’s long term strategy for the use of the property.
Often tenants are asked to sign a renunciation – a legal acknowledgement by the tenant that even if the tenant remains in occupation for 5 years or more, they will not automatically be entitled to a new long lease.
The tenant needs obtain independent legal advice before signing the renunciation.
We can advise landlords and tenants on the merits of putting a renunciation in place before entering into short terms leases of commercial property. Contact our team today at info@mcgrathmullan.ie
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