10 Mar 23 by Helen Hollow
The presence of mezzanine accommodation within commercial premises can often lead to debate between a landlord and tenant – does it hold a rental value and, if so, how much value can be applied to it?
A compliant mezzanine is considered to be a substantial structure with a permanent staircase, constructed to building regulation standards. Mezzanines give occupiers the option of having additional accommodation within their property which may otherwise not be available. Although the majority of mezzanines tend to be found in industrial premises as storage, depending on the property type, it’s use and location, mezzanines can also provide useful showroom, office or staff facilities. The inclusion of this accommodation does, however, reduce the ceiling height to a property which may or may not benefit any future occupants.
Whether or not a mezzanine holds value to a landlord can depend on many factors; was the property leased to a tenant with the mezzanine in-situ or was consent given by the landlord for a tenant to construct one? If consented to, how long ago and was it legally documented? These are just a few questions that would require clarifying before a decision can be provided to both parties on whether a rental value can be attributed to the mezzanine.
Finally, assuming the mezzanine can be valued, the rental value to be applied may also be up for debate; the quality and use of the accommodation are but two factors which can impact on this decision.
Evaluating the legal and financial position relating to a mezzanine is not always a straight forward matter, particularly in cases where one or both parties do not hold the appropriate documentation to clearly show construction dates or agreements to set out works carried out by either party. Obtaining professional Lease Advisory assistance to help determine any such matters can provide both landlords and tenants with essential information and advice, delivered pragmatically to reach a sound conclusion.