December 9, 2024

Leasing a children’s home – what providers might need to know about lease terms.

Given the increased demand for children’s homes coupled with the lack of property to acquire, increasingly providers are seeking to lease properties. This article will look at some of the key points to look for in a children’s home lease.

Planning.

We have previously looked at possible planning issues, so we won’t look at those points here. However it should be noted that the lease might need to be conditional upon acquiring planning consent.

Heads of terms stage.

Once a property has been identified a key stage is to establish the heads of terms. By doing this at an early stage it can save considerable time and cost.

There are a number of key terms to address:

  1. Term;
  2. Rent and rent review;
  3. Use;
  4. Breaks and extension to the lease;
  5. Parking and access arrangements;
  6. Repairs and alterations.

Types of lease available for children’s homes.

Children’s homes leases are granted to the provider. This will often be a limited company. As such, even though it will be a residential lease it cannot be an Assured Shorthold Tenancy and therefore will lose many of the protections the legislation around this type of tenancy brings.

The lease will be a “common law tenancy”. This is governed by the wording of lease itself, without any legislative protections.

What are the key clauses to look out for in a lease for a children’s home?

When it comes to negotiating particular clauses, there are a number that will be of particular importance:

  • Term

    This is the length of the lease. For growth and continuity of location, it is important that the lease is of sufficient duration. If a long-term lease cannot be agreed then a compromise would be to have the ability to extend the term which is discussed below.

  • Rent and rent review

    Establishing a market rent is usually done at the heads of terms stage, and often by working with a surveyor.

    The rent review is important as this establishes the rent increase. It can be a market rent increase, agreed fixed amount or RPI linked. If RPI linked it’s important to establish what is known as a cap and a collar, being a minimum and maximum increase.

  • Use

    This is a key factor and should link to any established planning use. It may need to be amended to allow carers to stay at the property.

  • Safeguarding

    Given the occupants will be vulnerable children then sufficient safeguards should be put in place dealing with prescribed conditions of entry to the property by the landlord.

  • Breaks and extensions

    Linking to the term above, the tenant will want the flexibility of perhaps exercising a break in the event the lease needs to be terminated early, for example funding reasons. The tenant may also want the option to extend the lease past its original term by way of an option to extend.

Children’s homes leases have their own complexities and it is always advisable to consult professionals who are experienced in this sector to ensure that sufficient protections are put in place.

Questions about a children's home lease?

Contact Rob Walton from our specialist health & social care team to find out how we can help.

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