12 Top Tips for Tenants taking a Lease of Commercial Property

Posted:28th November 2023

When leasing commercial property, tenants must consider various factors to ensure they make informed decisions that protect their interests. Seeking professional advice, understanding the lease terms, and evaluating important aspects such as rent, repairing obligations, and security of tenure are crucial steps.

As tenants, what should you keep in mind before signing a lease agreement?

Rent

Tenants should carefully evaluate the amount of rent, payment schedules, and any rent review provisions outlined in the lease. Seeking advice from a qualified surveyor can help ensure that the proposed rent is fair and market-appropriate. It is also worth considering negotiating for a rent-free period, allowing tenants some financial flexibility during the initial stages of their business.

Break Clauses

Considering the desired length of the lease term is crucial. Including a break clause in the lease agreement provides tenants with the option to terminate the lease early if necessary. It is vital to understand the conditions attached to exercising a break clause, such as providing notice or potentially incurring a penalty. This flexibility can be invaluable if business needs change or relocation becomes necessary.

Repairing Obligations

Understanding the repairing obligations outlined in the lease is essential. Tenants should be aware of their responsibilities regarding maintenance and repairs, both at the beginning and throughout the lease term. Seeking legal advice can help tenants negotiate fair terms and clarify any potential ambiguities.

Service Charges

Service charges, which cover the costs of certain services related to the property, should be carefully examined. Tenants should ensure they understand the services covered by these charges and assess whether they are reasonable in relation to the property’s value and their needs.

Security of Tenure

Evaluating the security of tenure is crucial for tenants. This refers to the right to remain in the premises at the end of the lease term. Tenants should consider the implications if security of tenure is not provided and assess how this may impact their long-term business plans.

Permitted Use

Tenants must ensure that the lease allows them to use the premises for their intended business activities. Checking for any restrictions that could hinder business operations is important. Seeking legal advice can help clarify the permitted use and address any concerns.

Alterations

If tenants plan to make alterations to the property, it is vital to ensure that the lease permits such modifications. Obtaining necessary consents and permissions is crucial, including those for changes to the property’s appearance or its fit-out. Discussing these requirements with the landlord or estate owner is recommended.

Landlord’s Obligations

Understanding the landlord’s obligations, especially in terms of repair and maintenance, is essential. Tenants should consider who will pay for any costs related to these obligations and inquire about any planned maintenance work that might affect their tenancy.

Insurance

Evaluating the insurance requirements outlined in the lease is important. Tenants must understand who is responsible for insuring the premises and the extent of coverage provided. Seeking advice from an insurance professional may be beneficial.

Get a Survey

Engaging a qualified surveyor can provide tenants with valuable insights into the property’s condition and potential issues that may require attention. A thorough survey helps negotiate lease terms, especially in requesting necessary repairs or improvements. A comprehensive schedule of condition can protect tenants from liability for pre-existing damage or defects.

VAT

Tenants should determine if the property is subject to Value Added Tax (VAT). Some commercial landlords may have elected to charge VAT on rent and other lease payments. Understanding the VAT implications is crucial to budgeting and financial planning.

Seek Legal Advice

Above all, tenants should seek legal advice from a solicitor or qualified advisor before signing the lease. This ensures a thorough understanding of rights, obligations, and legal implications specific to their situation. Professional guidance is invaluable in assessing and negotiating lease terms effectively.


Leasing commercial property requires careful consideration of various factors to protect tenants’ interests. By seeking professional advice and thoroughly assessing aspects such as rent, break clauses, repairing obligations, and security of tenure, tenants can make informed decisions that align with their business needs. Taking the time to understand the lease terms and consulting with legal professionals will help tenants navigate the complexities and secure the best possible outcome for their lease agreement.

If you are thinking about taking a lease on a commercial property, contact our expert solicitors to review your options and give you peice of mind. Contact us on 0330 024 0245 or at [email protected]