commercial

Most businesses still need physical premises to run their business and many business owners, especially start ups may not be aware of the risks and considerations of entering into a lease.

The article below was to make tenants aware of some of the main issues that are included in a lease and to encourage the reader to make contact to get advice if considering entering into a lease.

Renting Commercial Premises

Whether setting up a new business or moving to alternative premises, it is important to understand just what a big commitment renting commercial property is. It is a major financial commitment likely to last for many years.

The terms upon which a tenant occupies commercial premises are generally recorded in a written lease agreement. You need to know what the written agreement contains and what it means for you going forward. It is usually sensible to obtain legal advice on the terms.

One of the main considerations is cost. The headline rent may be clear but there are other cost to check including business rates, insurance, service charge and utilities.

There may be provisions for rent reviews, to change the level of rent during the term of the lease. Sometimes landlords will seek to impose upward only rent reviews, meaning the rent will not be reduced but may go up.

The other main concern will be the length of the lease. How long do you want to commit to? Sometimes there will be a break clause in a lease, allowing you to end the lease term early. Break clauses usually need to be activated by a certain date as set out in the lease itself.

Another issue which tenants can be caught out by is the obligation regarding the condition and repair of the property. Tenants can sometimes have a shock at their obligations in relation to the repair of the property both during the term of the lease but particularly at the end. Sometimes, the repair obligations require a tenant to improve the condition of the property.

Tenants who do not obtain legal advice on the terms of the lease, can find out there are onerous obligations within it, which they did not fully understand or even realise were there. It is better to get advice up front and before signing off the lease to understand what it contains and if necessary and possible, to negotiate changes to the lease terms.