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Entering into a Commercial Lease – why expert legal advice is so important

Entering into a new commercial lease can be tricky business. Once you have signed the lease, following completion, it becomes a legally binding agreement between you and the landlord. It is therefore imperative that you seek expert legal advice at the outset to ensure that the lease is tailored to your business’ requirements.

We set out below some of the matters you should have at the forefront of your mind when considering entering into a commercial lease.

  1. You may be asked to enter into a Rent Deposit Deed . In the event you default or breach any of the lease covenants the landlord has the right to withdraw sums from the rent deposit to cover any costs.
  2. If you are taking a lease of part of a building, you may be required to pay a service charge. Make sure you ask for an estimate of what this will be.
  3. Do not always assume the lease will cover your proposed use. Check the lease to ensure your proposed use is permitted and always carry out a local search to ensure that you are allowed to carry out the intended business from the property.
  4. If a lease is ‘excluded’ from Part II provisions of the Landlord and Tenant Act 1954 (LTA 1954), you will have no automatic right to stay in the property at the end of the lease. A lease with Part II LTA protection means that you have a right to request a new lease and the landlord can only refuse on certain grounds.
  5. Remember to clarify whether you will have pay VAT on the rent or the purchase price of a commercial property, this could significantly affect your budget.
  6. Rent continues to be payable by a tenant even where the premises is damaged. Include a provision in the Lease that if the premises is damaged by an insured risk and becomes unfit for occupation, rent ceases to be payable!
  7. Even if the Landlord is responsible to insure the premises demised by the Lease, in most commercial properties you will be required to share the cost.
  8. Check the Lease to ensure it contains adequate rights of way for you to enter your new premises.
  9. You should request a photographic schedule in your Lease (schedule of condition) to limit any repairing obligation and avoid future costly disputes.
  10. When it comes to negotiating your commercial lease, assume the terms are open for discussion. Once you’re in, it’s too late!

How can Askews help you?

Askews Legal LLP has a dedicated team of Property specialists who can assist with any commercial property issues. For further advice or to obtain a quote, please contact Kuljeet Sandhu, Head of Commercial Property at Askews Legal LLP

E: KSandhu@askewslegal.co

T: 024 76 231000

 

 

Askews Legal LLP – Solicitors Coventry.