David Sullivan, Managing Partner
Whether you are a commercial landlord or a tenant looking for a commercial property, it is really important to pay attention when negotiating the lease on the property. Whilst the focus of the lease will be different depending on which role you will take in the transaction, the issues are still the same.
As a commercial tenant it is important to recognise that you want to achieve the best deal possible and the market is quite competitive, so it is worth negotiating hard when it comes to drawing up your lease.
You could try to negotiate a rent free period, which your landlord may agree to, as you will still be paying the business rates on the property. You should start by considering the length of your lease. Longer leases may offer better rates but could tie you in for too long, particularly if you are a start-up and you are unsure of the future.
Remember, you will be liable to pay rent for the whole length of your lease and without a break clause or the ability to sub-let the property, you may find yourself in a difficult situation of needing to financially reimburse your landlord to break your lease.
No matter what the lease length, it is prudent to add in a break clause. This allows you to break your lease before the end with no penalties at all. A break clause is a common clause in commercial leases these days and is normally around half the lease length. It is worth checking that the lease provides security of tenure.
This is given to any business in a commercial property and allows them to automatically renew their lease if they choose to. Some landlords will try to exclude this clause, perhaps because they have plans to redevelop, however ask your solicitor to specifically check this.
Finally, be aware of your responsibilities for repairs to the property and ask your solicitor to explain exactly what the lease prescribes. If the terms are not acceptable, then renegotiate.
It is crucial to obtain the advice of an experienced commercial property solicitor who can discuss with you in detail each clause of the lease to make sure there are no surprises.
For more information about this article or any aspect of our business legal solutions, give David Sullivan a call on +44 (0) 28 9077 4500
0+
