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Pop-up space

Pop up space is increasingly available where retail units are falling empty as tenants can no longer meet rent payments due to the poor economic climate and landlords are left with space for which a commercial, rent paying tenant cannot be found.  The terms ‘pop up’ and ‘meanwhile use’ are often used interchangeably, although what have been described as meantime leases have also been granted for the short term occupation of office space.  The uses to which this space can be put include not just shops but creative workshops, educational facilities and drop-in advice centres.

The prime attraction for a landlord is the ability to pass on the liability for rates to the temporary occupier, since only the first three months would be covered by empty rates relief. The costs of security, utilities and insurance could also be passed on, at least in part, under the meanwhile arrangement. In return, a charitable occupier could negotiate a minimal rent or rent free use of the space, typically with the occupier agreeing to vacate the premises on short notice if the landlord finds a commercial tenant.

Considerations for the landlord / occupier
The following issues should be taken into account when considering whether to occupy or let pop up or meanwhile space:

•    Does the planned use comply with the current authorised planning use? You can find out the current use by contacting the local planning authority and can check whether planning consent will be needed for any proposed change of use.
•    If the landlord himself leases the premises, will the meanwhile use comply with the terms of his own lease and will a superior landlord’s consent be required to the letting and/or planned use and/or any planned fit-out?  What delays could this cause?
•    The landlord must ensure that the occupancy arrangement does not acquire security of tenure under the Landlord and Tenant Act 1954
•    Will a rolling break clause be included for the landlord and/or tenant so that either party can bring the arrangement to an end if the premises are no longer required by the tenant or are required for commercial letting by the landlord?
•    What alterations to the property will be required to make it suitable for the occupier? How long will the pop-up space need to be occupied for, to make this a worthwhile investment?
•    What repairing obligations, if any, will the occupier take on?  Will they be limited by reference to a Schedule of condition or will the tenant be required to make a service charge contribution instead of undertaking repairs himself?
•    The tenant would not be entitled to assign or sublet the premises since the arrangement is intended to be personal to the tenant but the tenant should be able to end the agreement if it no longer needs the premises.
•    Both parties will need to keep the terms of the agreement as simple as possible in order to minimise costs.
•    A charitable tenant will need to ensure that it does not jeopardise its ability to claim discretionary rates relief as a result of the use of the pop up.   There has been a growing tendency for local authorities to challenge discretionary or top up rates relief where it is felt that the use of the pop up is not wholly or mainly for charitable purposes, for example, where the pop up has been used for storage rather than trading.  The trustees must therefore be sure that the pop up will be used for the exclusive benefit of the charity and will further the charity’s purposes and be in its best interests. 

The Department for Communities and Local Government (DCLG) promotes the use of ‘meanwhile use’ leases to encourage the temporary occupation of empty town centre retail premises by non-commercial occupiers, which would include voluntary or charitable groups. Specimen leases are provided on the DCLG website and are designed to provide an industry standard which will minimise costs for both landlords and tenants and enable tenants to move into the space as soon as possible.  The DCLG specimen leases also provide for the situation in which local authorities or other established organisations, such as charities, step in as intermediaries and take on the leases themselves and then in turn sublet to community groups (called an intermediary meanwhile use lease).

The sections above dealing with Renting and Letting may also be helpful in explaining the main issues which you will need to consider when taking or providing space.

Looking for pop up or meanwhile space 

If you are looking for pop up or meanwhile space, or have such space to let, you might find the following websites helpful: www.meanwhilespace.com, www.somewhereto.com and www.3space.org.

The Government has also launched an initiative, Space for Growth, which is making available surplus premises within Government buildings for flexible use by charities and social enterprises.  Access is subject to passing two security checks but the premises are then available rent free.