The Leasehold Conundrum

March – April 2026 | Nursery Management Today | view on page 10/11

Selling a nursery involves many moving parts, but one issue causes more delays and failed deals than most owners realise – the lease. Much like a finicky toddler, landlords need to be handled with care. Be prepared, stand your ground and hopefully the tantrums can be avoided. Here are some top tips for making sure your lease is ready for sale and how to manage the process.

Short rolling leases

Generally for settings based in church halls or scout huts, a rolling lease (a rental agreement that automatically renews annually after a fixed-term contract expires) looks like a sure thing. However, with a rolling lease you are potentially never more than a year away from being chucked out, regardless of how long you’ve been there.

If you’ve been in the setting for a long time, there’s a good chance your landlord’s situation has changed. It may be worth having a conversation about moving to a more traditional, longer lease to provide greater security. While a buyer may still struggle to get lending on a five-year lease, it offers them greater security and peace of mind when investing their own funds into the purchase. Don’t assume that what you have is all you will get.

The perfect term

If your landlord is open to a longer lease, make sure you really push your luck and ask for at least 25 years. When it comes to security of tenure, a 25-year lease under the terms of the Landlord and Tenants Act 1954 is the way to go as this means that the tenant will have a statutory right to renew their lease at the end of the contractual term.

Generally, anything over 15 years should be secure enough to allow a buyer to borrow money, but it needs to be 15 years at point of sale. If you are approaching a lease renewal and looking to exit in the near future, allow for a time buffer so the lease is still suitable for your buyer. Also remember to have the lease in the name of your limited company, as it is an asset of the company, with no input from the landlord needed and no ongoing liability for you at point of sale.

A snail’s pace

Your landlord has no vested interest in your deal or in moving faster than they have to. This is especially true if you are looking to get a longer lease to allow for sale, as there is no legal requirement for your landlord to provide one mid-term.

Leaving the buyer to agree a new lease as part of the sale can look like the easiest solution, but it can become an arduous process if the landlord or their agent progresses at a glacial pace. This can mean that your buyer’s finance offer may expire while you wait, potentially leading to extra fees or changes to lending. A faster option is always to create a situation where the landlord’s input in the sale itself is minimal. Aim to extend the lease yourself prior to sale. No muss, no fuss.

Council leases

Council leases are great. They tend to be cheaper than other commercial rents, and you know that the council wants you to stay. Unless it is looking to redevelop the area, you are there for the long haul. However, despite that, council leases do tend to be short, sometimes a five-year rolling lease.

We know on paper that the lease is secure, but a lender or risk-averse buyer will look on the negative side. We also have the constant administrative squeeze of councils, which means that while you know you will get a lease, actually getting the paperwork can be a chore as the council doesn’t have the manpower to turn things around quickly.

A council I’ve worked with as part of a recent sale was quoting a four-year backlog in issuing new leases, and another one has taken three years of negotiations to get to the point of signature. Be prepared. Ask for a longer lease and argue that you have been a long-term tenant and want to invest in the business and property.

Councils are strapped for cash and the prospect of minimal lease renewal costs, and a tenant that is spending money, is a good one. Make sure the lease is transferable to a buyer and that everything is in place before you sell the business.

Sub-leases

If you have a sub-lease then your sale will probably involve the head lease owner and the landlord. You are also limited to whatever term the head lease has, regardless of what you would want. You might like another 25-year lease, but the gym or other property you rent your nursery space from may not.

The first step is to understand your lease and how it relates to the head lease owner. Have they sublet to you for the full term of their own lease, and when that ends, do they have the right to renew?

If they decide not to renew, is there an option to agree with the landlord directly? Or would they be open to adjusting their lease now, and allow you to take up a lease directly with the landlord.

But my sale is years away….

I want everyone who is reading this to do one thing for me right now. It doesn’t matter whether you have one setting or 20, if you are looking to sell next year, or plan to go on forever. If you rent your property, where is your lease? You know, that document you signed so many years ago, and that is now composting in a drawer.

Go and find it now and commit to reading it this week. Go through and highlight the key terms, length, rent reviews, right to assign to a buyer. If there are areas that you don’t understand, reach out to someone like me or a solicitor who can explain what they mean.

Don’t wait until it’s just about to be renewed and time is short, so you assume the same as before is fine. Look at it now and work out what you would want when that time comes, what groundwork can be laid now, what obstacles might be in the way. A little bit of preparation now may stop your landlord from scuppering your sale.

If you’re considering a sale, or simply want to sense-check your current position, we’re always happy to offer a confidential, informed perspective. You can reach us at www.owenfroebel.co.uk or on 02475 226930 – a short conversation now can often prevent unnecessary complexity later.