Roythornes Banner Image


News and Events

Top Tips for entering into a Commercial Lease

View profile for Navroop Kaur
  • Posted
  • Author

Have you found your perfect new location for your new business? Are you looking to relocate your business into a new space whether its retail, for office use or for something different?

Whether you choose to liaise with an agent or with the landlord directly, the first step is to agree the terms of the lease.

Failing to understand what the terms mean could have a negative impact on your business.

Here are 8 top tips to consider when making the big decision to grow or move your business to a different location and entering into a lease.

  1. Are you leasing part of a building or the whole?
    This will affect your repair obligations. Usually a landlord would be responsible for repairing and maintaining any common parts.

    Consideration should be given for the responsibility of the exterior repairs. A landlord would be responsible for these if the lease is part of a building or the building is multi-tenanted.
  2. Considering alterations to be made
    Contemplating and agreeing any alterations you wish to make at the outset will help avoid delays if these are agreed between parties at the outset. This will assist your legal professional with drafting.

    You can continue to consider these works whilst the lease is being prepared and take the advice of workmen, contractors and surveyors if necessary.
  3. Being aware of the on-going costs
    A longer lease term will mean a longer commitment. It is important to consider all costs involved in entering into a lease and the monies that could potentially be requested during the lease term.

    Check and find out if there is any service charge to be paid to the landlord for any maintenance or upkeep of the property or any common areas. Is this a fixed amount or can it be varied?

    Estimated service charges are helpful for you to see a full breakdown of the services and for any future planned maintenance. This will help you consider the future costs during the duration of the lease.

    A tenant is usually responsible for paying the premium for the landlord to insure the building.
  4. Repairing Obligations
    A tenant will usually be responsible for repairs. You may wish to document the condition of the property prior to entering into the lease to avoid any future disputes with your landlord relating to repair obligations.

    This is particularly useful if you are agreeing a lease for a longer term and potentially avoid huge repair costs.
  5. Agreeing Rent Reviews
    A landlord may wish to include the requirement for a rent review if the lease if for a longer term. This gives the landlord the right to increase the rent after a fixed amount of time and it will be reviewed based on the market rate at that time. It is difficult to predict market rates in the future.

    A landlord will want the review to be on a ‘upwards only’ basis which means that even if the market rate is lower than the current rent then the tenant will continue to pay the same amount of rent. Some tenants agree fixed increases.
  6. Break Clauses
    It is important to consider how the lease will end and under what circumstances. A lease is usually agreed for a fixed period (term).

    Including a break clause can allow either a landlord or tenant or both to terminate the lease before the end of the term. The clause should not include any conditions so that it is easily to exercise.
  7. Is there any stamp duty land tax payable?
    Stamp Duty may be payable and this will depend on the term and rent payable. This can be calculated using the HMRC guidance and will help you plan your costs.
  8. Choosing the right legal professional
    Make sure you choose the right professional to provide you with accurate tailored advice to help you achieve the best outcome and results for you and your business.

Please don't hesitate to contact Navroop for any advice or questions you may have about entering into a Commercial Lease.