A commercial lease can be an asset – but it can also be a very expensive liability. Taking great care before agreeing terms or signing on the dotted line is therefore vital, as once terms have been agreed it is virtually impossible to change them. Here are some of the key considerations:
- Ask for an initial rent-free period, especially if you will be fitting out the premises at your expense.
- Think about whether you need a break clause in the lease, particularly if you are starting a new business or plan to expand during the lease term.
- Look into limiting your repairing obligations, as full repairing and insuring leases can be extremely onerous.
- Commission a survey of the property to establish your potential liability for repairs. It is a false economy if you do not.
- In the case of a new building, it’s essential to exclude liability for inherent defects in the construction.
- Find out if a service charge is payable under the lease. If so, look at the last three years’ service charge accounts.
- Take advice before agreeing to a rent deposit or a guarantee.
- Check whether you have security of tenure.
- If the lease is to be a long one, make sure that rent review intervals are reasonable.
- Check whether Stamp Duty Land Tax is payable on the transaction and if the lease needs to be registered at the Land Registry.
- Finally, make sure that you don’t agree to pay the landlord’s professional fees.
We can assist with the review of proposed terms and conditions, or if you require specialist advice or negotiations.