I rent a shop and the lease is expiring ...

Asked by flowers777 on 21-10-2015 21:27:06
Question posted in the Landlord Tenant Law category relating to Gauteng

I rent a shop and the lease is expiring 31 October 2015. the land lord increased the rent to R150 per sq/ meter and is requesting us to pay key money of R600 per square meter for one year R700 2 years and R800 for three years which is non refundable. over and above the increase rent which excludes management fees electricity plus vat.. I have told him that the key money will not be paid because he I has my deposit . he told me that the shop will be locked abd that o will be liable for the rent as long as tge fjpl stands empty. He has now gone back and said that he waives the key money however the rent per square meter will be R250.00 . I asked what if I wanted to renew the lease for three years he said it will then be R180.00 per square meter. This is a huge jump from R140 per square meter to R180.00 per square. what is my rights . is the fair and readpbabke . what can I dp from a legal perspective

Answer to the Question

Posted by Att. Patrick on 21-10-2015 22:17:55
Hi there and thank you for your question,

First, if your lease is expiring, I am assuming that there is no "right of renewal" clause in the lease agreement which would enable you to automatically renew the lease for a further 3 years?

If so, you need to understand that if a new lease agreement is going to be entered into, all of the terms will need to be negotiated between the landlord and the tenant. This is typically where landlords push the tenants as hard as they can, and increase the rental by as much as possible. The economy is picking up, and landlords are using this time to "milk" tenants for as much as they can.

If you don't agree to the terms, then your lease will expire on 31 October 2015. After that date, there is ABSOLUTELY NO legal grounds for the landlord to hold you liable for a single day that the shop remains empty. None whatsoever. He is lying to you, and you should tell him that much.

If you don't agree to a new lease, both parties would simply walk away from each other.

Unfortunately you don't have any "rights" as a tenant in this situation. Your lease will expire at the end of the month, and you are essentially negotiating as a commercial business person. The best is obviously to find a middle ground, so perhaps I can suggest something.

Year 1 : rental of R155 / meter
Year 2 : rental of R165 / meter
Year 3 : rental of R180 / meter

In that way he can get his rental eventually, however there is a gradual increase.

Also, typically landlords increase their rental by 6 - 10% per year. There is no real basis to require a 10% increase.

What would be most fair, is if the increase was in line with CPI, or the parties could agree to hire a commercial property broker to give an estimate as to the market rental. You could hire 2 brokers for an estimate, and then use the average - which the landlord and you would agree would be the rental? 

If there is a part of the answer which you need more advice on, or clarity please continue in this same thread instead of opening a new question.

Att. Patrick

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