This section includes guides to lease-related negotiations and legal compliance. It also provides useful advice for business tenants who want to know more about occupying commercial real estate.
We’ve gathered together the commonly asked questions concerning commercial tenancy into the list below.
In addition to the level of rent payable, a tenant should also enquire about the extent of the service charge as this can sometimes be as much as half the level of rent so it is an additional expense the tenant will need to budget for. A tenant should try to negotiate an initial rent free period to cover any fitting out work that they plan to undertake.
Firstly, the prospective tenant needs to decide the parameters of the business premises they are looking for. It would be wise to draw up a property specification with details focusing on things such as whether freehold or leasehold premises are preferred and in the case of the latter, what flexibility is required and what rent can the business afford. The tenant should also consider how much space they need and any particular requirements, for example, high ceilings or parking spaces.
For further advice, please see our Occupying Commercial Property advice page.
This varies business to business, so it is very difficult to provide any specific timeframe.
For a detailed breakdown of what must be addressed prior to relocation, please visit our Lease Negotiations page for a Relocation Timeline.
As with traditional leasehold occupation, this varies business to business. However, relocating between two spaces held on a licence is generally less complicated than relocating leasehold premises.
For a detailed breakdown of what must be addressed prior to this type of relocation, please visit our Flexible Working page for a Relocation Timeline.
Business tenants have an automatic right to renew. This is a statutory right and unless it has been expressly given up, the tenant can apply to the Court for a new lease at the end of the term.
For further information, please see our Lease Renewals advice page.
If the landlord wants to retain control of the property at the end of the lease then the tenant will be asked to give up its statutory right of renewal (security of tenure). A landlord must serve a notice on the tenant who must declare that they agree to give up this right at the outset of the tenancy. This process is referred to as ‘contracting out’.
Most leases include an alterations clause. This will dictate what the tenant can and cannot do, with or without the permission of the landlord. A tenant may also need other permissions/consent from the planning authority/building control etc. There are likely to be costs involved in obtaining consent.
SDLT is payable on all new leasehold or assignment transactions that are of a Net Present Value over £150,000. Additionally, SDLT will also be payable on the cost of any premium paid for the benefit of the lease or assignment over £150,000.
Business rates are charged on most non-domestic properties like shops, offices, pubs, warehouses, factories and holiday rental homes or guesthouses. There will be a liability to pay business rates if a building or part of a building is used for non-domestic purposes.
For further information, please see our Business Rates advice page.
Generally speaking, the organisation in occupation of the premises is responsible for paying business rates. Sometimes the landlord will pay rates on the tenant’s behalf.
For further information, please see our Business Rates advice page.
Your lease should state when the rent will be reviewed and on what basis the new rent will be established. Typically rent reviews are based on open market rents that will tentative’s include index in the rent to inflation.
For further information please see our Rent Review advice page.
The tenant will be responsible for the insurance premium for the premises to cover any damage and also loss of rent the landlord may suffer if the premises become unusable. With most leases the landlord will also arrange and pay for buildings insurance and then pass on the costs. The tenant would usually want to include other insurances, for example to cover contents, and employers liability insurance etc.
For further information, please see our Insurance Tips advice page.
The tenant must carry out a health and safety risk assessment in the workplace and take action to remove any hazards. Normally the tenant will be responsible for fire safety, safety of electrical equipment, gas safety and managing asbestos. The tenant is also responsible for providing a reasonable workplace temperature, enough space, ventilation and lighting, toilets and washing facilities as well as drinking water and safe equipment for their staff.
For further information, please see our Tenant Compliance page.
Call or contact us for an initial consultation to help plan the appropriate course of action to take.
The lease will specify who is responsible for repairs and maintenance of the property. The tenant may also have to contribute to the upkeep and maintenance of common parts of the whole building such as the roof and structural walls or other things that are used in common with the other occupiers such as lifts or a reception area. This will be covered in your service charge.
For further information, please see our Service Charge advice page.
When a tenant moves out, they may have to pay for certain repairs or return the property to the state it was in when you first took occupation. This liability to repair is known as dilapidations and reflects the repairing and decorating covenants in the lease.
For more information, please see our Dilapidations advice page.
Once a lease is signed a tenant is under contract and must continue to meet the lease commitments. They can always speak to the landlord if circumstances change. If the tenant is looking to exit early and does not have a break clause, then they may need to consider surrender, subletting the space or assigning the lease.
For further information, please see our Disposing of Leasehold Property advice page.
A break clause allows either or both parties to bring the lease to an end earlier than the expiry date. Usually a period of notice must be given to exercise the break (typically six months) and sometimes a tenant wishing to exercise a break option may have to pay a penalty for doing so.
It will depend on the terms of the lease. If the lease permits the tenant to dispose of their leasehold property via assignment or sublease, an approach to the landlord will be required for consent to do so in the majority of cases. The tenant will be expected to pay for the landlord’s legal and professional costs.
Lease surrender is a method of leasehold property disposal, it is an agreement between the landlord and the tenant to bring the lease to an end prior to the agreed lease expiry date. However, the decision to grant a surrender is completely at the landlord’s discretion. Most landlords will be reluctant to allow the tenant to exit the lease because the tenant is the source of their income.