u/aldo_daponte

There’s a lot of confusion about where leasehold reform has actually got to, so here’s the honest position as of now.

What’s already changed: the two-year ownership rule went in January 2025. You can start a statutory lease extension the day you complete your purchase. That matters more than it sounds — buyers of short-lease flats used to be stuck for two years watching the lease shrink and the premium grow.

What hasn’t changed, despite the headlines: marriage value. Yes, the 2024 Act abolishes it. No, that part isn’t in force yet. If your lease is under 80 years today, you are still paying marriage value on a statutory extension. The freeholders’ court challenge to the Act was thrown out in October last year, which cleared the road — but the road still has to be travelled.

Where it’s going: in July the government opened two consultations on the numbers that will actually decide what extensions cost under the new rules — the valuation rates, and who pays the professional fees. They close on 23 September. Realistically, the new regime lands in 2027 at the earliest.

So what do you do? Rough guide, not advice. At 90+ years, you can afford to wait and watch. In the low-to-mid 80s you’re in the awkward zone — every year of waiting takes you closer to the 80-year line, and nobody in government has promised the new rates arrive before you cross it. Under 80, the damage is already done in valuation terms; whether waiting for reform beats acting now depends on numbers nobody has yet, so get a proper enfranchisement surveyor to run both scenarios.

Happy to dig into specifics in the comments.

A restaurant may occupy a shop unit, but it is not simply another retailer. The property has to function as part of a production system: deliveries arrive, food is stored and prepared, heat and smells are generated, waste leaves, customers arrive in concentrated periods and staff may be on site long after neighbouring shops close.

That is why a unit that looks perfect during a viewing can be completely unsuitable once the operational questions begin.

Extraction is the obvious example. A duct may need to reach roof level, pass through several ownerships and satisfy planning, environmental-health, fire and landlord requirements. 'There is a route for extraction' is not the same as having a deliverable extraction solution. The route has to be surveyed, designed, costed and approved.

Power, gas, drainage and water are less glamorous but just as important. An attractive dining room is no use if the electrical supply cannot support the kitchen, if the drainage falls are wrong or if a grease-management solution cannot be installed. Upgrading services can be expensive and slow, especially in old or listed buildings.

The layout must work operationally. How do deliveries reach the kitchen? Where is waste stored between collections? Can staff move between preparation, cooking, pass and wash-up without crossing each other all night? Is there enough back-of-house space, or has the rent been justified by customer-facing square footage that the business cannot actually use?

Hours and neighbours also matter. A late licence does not guarantee that the lease, planning consent or building rules permit the same hours. A residential occupier above the unit may make noise and odour controls far more demanding. Complaints can turn a theoretical risk into an operating restriction very quickly.

The financial test is therefore different. For ordinary retail, rent may be compared with expected sales per square foot. For F&B, the model also needs covers, table turns, average spend, delivery share, labour, food cost and the proportion of space that produces revenue. Two restaurants paying the same rent can have completely different economics.

The lesson is simple: do technical and operational due diligence before becoming emotionally attached to the site. A restaurant property is not a shell waiting for a concept. It is a machine with constraints, and the concept has to work inside them.

Operators: what is the property issue you wish you had investigated earlier?

Heads of terms can look reassuringly short. That is part of the problem. A page or two of bullet points can commit a retailer to a property decision that will shape the business for five or ten years.

I work on the occupier side of retail transactions, and the mistake I see most often is treating heads of terms as a warm-up for the lease. They are not usually legally binding in full, but they set the commercial bargain. Once both sides have agreed them, reopening a bad point becomes much harder.

Start with the total occupancy cost, not the headline rent. Ask for the latest service-charge budget and reconciliation, the business-rates assessment, insurance contributions and any estate or marketing levy. A unit advertised at an acceptable rent can become unaffordable once the rest is added.

Then test the lease term against the business plan. A ten-year lease may suit an established operator; it may be reckless for a first UK store. Look carefully at the break clause. When can it be exercised, how much notice is required, and what conditions attach to it? A break that depends on perfect compliance with every lease obligation may be less useful than it appears.

Repairs deserve their own conversation. A full repairing obligation can leave the tenant responsible for an old roof, tired plant or defects that existed before occupation. A schedule of condition can limit that exposure, but only if it is properly prepared and attached to the lease.

For retail and food businesses, the permitted use and alterations provisions matter just as much as rent. Can the unit lawfully support the intended use? Is extraction possible? Can the shopfront and signage be changed? Are there landlord approvals, superior-landlord approvals or estate rules that will slow the fit-out?

Finally, agree the practical timetable. When will the property be handed over? In what condition? When does rent start? Is the rent-free period long enough for design, approvals and construction, or does it start while the tenant is still waiting for consent?

My basic checklist is: total cost, term and break, repairs, use, alterations, fit-out contribution, rent-free period, security deposit, guarantee, handover condition and timetable. A solicitor should document the legal position. But the commercial decisions need to be made before the solicitor is asked to turn them into a lease.

What point in heads of terms has caused the biggest problem in a lease you have taken?

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