There will be occasions when you don’t take a new lease direct from the landlord, but instead take over a lease already granted to an existing tenant with a business already running at the property. If you buy that lease – the technical expression is “take an assignment” – then you won’t be negotiating a rent, you will just be continuing to pay the rent the previous tenant (your seller) was paying.
These are factors which may affect how much you pay the existing tenants to take an assignment of their lease. Let’s imagine the existing rent is £20,000 a year, but you know that if there was a rent review today, the rent might become £30,000 a year. The rent review is, in fact, in two years time. This is something you need to think about.
First, it’s a warning to you that you will only have the benefit of the lower rent for two years, and you need to be sure in your own mind that you can still make a profitable business when the rent goes up in two years’ time.
Second, if the market rent today, if the premises were being offered on the open market, would be £30,000 and you will only be paying £20,000 until the rent review in two years, you’re getting a financial benefit, and the existing tenants may very well expect you to pay them for some that with a premium. That is all part of the negotiation and agreeing of terms.