Securing the right commercial premises is crucial for any business. Starting out with a carefully thought-out, accurately drafted and comprehensive commercial property lease can mark the beginning of a hugely productive relationship between a landlord and their tenant and be a valuable ‘leg-up’ to success for both parties.
However, commercial property leases are not straightforward. Landlords and tenants both need to tread carefully to ensure any agreement they make is exhaustive, otherwise they can run into difficulties further down the line.
In this blog, our Commercial Property Solicitors answer some frequently asked questions about commercial leases.
What is a commercial property lease?
A commercial property lease is a legally binding agreement made between a landlord and a tenant. It enables a tenant to rent out specified premises for business use at an agreed rate for a set period of time.
Commercial property can include office buildings, hotels, warehouses, retail units, restaurants, or even entire shopping centres.
What is included in a commercial property lease?
Landlords and tenants both have certain responsibilities under the law when renting commercial property.
Tenants must carry out a health and safety risk assessment and have various other responsibilities.
Every commercial property lease is different, although most generally include information about:
- The type of property being let.
- The length of the tenancy.
- The type of tenancy (for example, whether it is fixed term or is renewed periodically).
- Information about how rent is due and how it will be paid.
- The types of activity that can be carried out from the premises.
- The security deposit.
A commercial lease also sets out various responsibilities and obligations for the landlord and tenant that must be adhered to throughout the lease’s term.
These can relate to, for example:
- Maintenance and repairs.
- Health and safety.
- Any restrictions about subletting the property.
- Service charges.
What is a break clause?
A break clause allows one or both parties to a commercial lease to end it early without being penalised.
Including a break clause in a commercial lease can provide flexibility and can protect against any unforeseen events.
However, conversely, break clauses can also remove certainty. Ending a lease ahead of its agreed term can leave the other party in limbo.
Can you automatically renew a commercial lease?
A commercial lease can automatically renew if it has security of tenure under the Landlord and Tenant Act 1954.
This states that:
- Tenants have the right to remain in the premises at the same rent and on the same terms after the lease comes to an end.
- Tenants have the right to automatically renew their lease in certain circumstances.
The Landlord and Tenant Act 1954 also sets out a strict process and time limits for the lease renewal process, including when notices should be served by and court-application time constraints.
Find out more about business lease renewals here.
Most business leases are protected by this Act. However, others may include clauses that mean they have opted out of the protections provided.
Are there any tips for negotiating a commercial property lease?
Renting out commercial premises can be complicated and leases must be negotiated carefully.
Some top tips for negotiating commercial property leases include:
- Do your research. Before you commit to a commercial lease, do your homework on the comparable market to ensure you have a clear understanding of current trends. Knowing a good price for your desired premises in your preferred location will help you negotiate preferable terms.
You should also undertake a thorough audit of business practices and operations, and its likely future growth, to ensure a lease on commercial premises you sign up to will continue to fit your needs as your business grows.
- Don’t be afraid to ask. Many landlords offer incentives in a bid to attract commercial tenants. These can include rent-free periods, contributions towards fit-out costs and free parking for employees. If you don’t ask, you don’t get.
- Instruct an experienced solicitor. A commercial property solicitor will ensure any lease is comprehensive and protects your interests. If you encounter any difficulties during a lease term, or run into any disagreements, an experienced solicitor can also advise on appropriate dispute resolution options.
At Langley Wellington, our commercial property law team has been helping commercial landlords and business tenants in Cheltenham and Gloucester and the surrounding areas, for many years.
Our specialist solicitors deal with all types of commercial property lease transactions, including negotiations, renewals and disputes, and will ensure you receive the best advice with minimum disruption to your business’s bottom line.
For legal advice about commercial property leases, call 01452 521 286 or click here to make an online enquiry.
- Read the small print. Commercial leases can be complex and include confusing legal jargon, terms and conditions. Prospective tenants must read contracts carefully to fully understand your responsibilities and obligations. It is important to remember that what is left out of a commercial property lease can be just as important as what is included, which is why the input of a specialist solicitor with experience in commercial property leases is vital to help with negotiations.
- Negotiate. Don’t automatically sign the first contract you are presented with. Signing a commercial lease is an opportunity to negotiate terms to ensure they protect your interests.
Commercial Property Solicitors Cheltenham
At Langley Wellington, we have a dedicated team of specialist commercial property solicitors who are well versed in all aspects of commercial property leases.
Our experienced commercial lease solicitors will support you whether as a landlord or tenant of a commercial premises and ensure that your interests are protected at every stage of the process.
Our property lawyer can also provide legal services and advice for the sale and purchase of commercial property.
Our expertise includes:
- Granting and taking of leases for offices, warehouses and shops.
- Negotiating, drafting and extending commercial leases.
- Buying and selling business premises.
- Auction purchases and sales.
- Rent deposits, guarantees and authorised guarantee schemes.
To find out more about our commercial conveyancing services or to speak with our team, call 01452 521 286 or make an online enquiry.
Langley Wellington LLP has two office locations across Cheltenham and Gloucester, find out more here.
This blog is not intended to be taken as advice or acted upon. If you are seeking legal advice, please get in touch with our team of solicitors.
