Negotiating a new lease of business premises

Solicitor Katie Hughes Specialist Commercial Lawyer offers some guidance.

You may think you have found the ideal premises for your business with a friendly and helpful landlord but the first rule is to make sure you know what is intended about responsibility for repairs. Get this wrong and the financial consequences could be expensive!

As a tenant you will certainly be obliged to put and keep the interior of the premises in a good state of repair. The important word here is “put”. If the premises are currently in a bad condition and you do not limit your liability, you will be obliged to spend money repairing and decorating the premises and then keeping it to this high standard, for the entire length of the lease. You will get no compensation from the landlord for your efforts. What can you do? Well one common solution is to consider agreeing a photographic schedule of condition with your landlord before you sign up and agreeing that you will not be obliged to leave the premises at the end of the term in any better state than when you moved in.

Remember there may be “hidden” costs. For example whilst the landlord usually does the repairs to the exterior of the premises, he will charge you for the work done or a percentage of it depending on how many tenants there are in the building. Consider a survey so you know what costs may be in store before you move in.

Do not overlook the costs of insurance. The landlord usually pays to insure the premises but the tenant reimburses them for the premium or part of it, if there are multiple tenants in the building. 

Those premises may seem the perfect long term home for your business but your requirements and circumstances can change. Think about negotiating for yourself the Right to Break the Lease at a given point. Also aim to have as much flexibility as possible in case you wish to assign or sublet the premises. Make sure also you are aware whether you will have the Right to Renew. There is a statutory regime in place and unless you specifically opt out of it you should be entitled to another lease at the end of the term. 

Katie and the other members of the Commercial Team at AMD Solicitors, offer further advice and information on buying, selling or leasing all types of commercial property. E-mail or telephone 0117 9621205 

This article is provided for general information purposes only and represents our understanding of the relevant law and practice as at the date of uploading. This article should not be relied upon as legal advice pertaining to any specific factual situation. Legal decisions should be made only after proper consultation with a legal professional of your choosing.

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