Home › News › Negotiating A Commercial Lease
There are many important points to consider when entering into negotiations concerning a new lease of commercial premises, in order to obtain the best deal.
Rent
Ensuring the rent is proportionate to the market value, means researching nearby properties and rents. It is important to understand whether your rent rate is in accordance with market research.
Negotiating a rent-free period at the beginning of the contract will help keep business costs down. Landlords are favourable to rent free periods as in the long term they are letting their property.
Rent review clauses must be examined carefully to ensure you are aware of the length of period and the terms of rent review clause.
Length of Lease
The term of the lease can vary considerably and can range vastly from 1 year to 25 years. If you are an established business then you may be looking for a longer term as opposed to a new business.
Negotiating a favourable break clause term is an important consideration, especially for a new business. Most commercial break clauses are normally a standard term for either three or five years.
Renewal
Ensure the lease does not exclude the Landlord and Tenant Act (1954) which excludes the right to remain in the premises at the expiry of the lease.
The Act provides protection in the form of the right to decide whether you wish to renew the lease at the expiry term. If you are looking for long term security then it may be wise to include a right to renewal clause in the lease.
Repairs
Majority of commercial leases include standard terms of full repairing and insuring clauses, which effectively mean the tenant is responsible for most repairs to the premises. Ensure the terms of the clause are fully understood and you are aware of your liabilities.
Negotiating, drafting and understanding the terms of a commercial lease is a complex process and ensuring clarity of legally binding obligations. It is always advisable to seek legal guidance.
