Taking on a commercial property lease can seem daunting and exciting all at the same time particularly when it is your first business premises. There will be a lot of things that need to be considered when taking on a commercial property lease and we have provided an overview of the 10 main things that you should consider:
- Location: Consider the location of the property and whether it is suitable for your business needs.
- Rent: Be sure to understand the terms of the lease, including the amount of rent to be paid, whether it is inclusive of VAT, and how often it will be reviewed and whether you are required to pay the rent monthly or as often the case, quarterly.
- Length of lease: Consider how long the lease is for and whether it is long enough for your business needs.
- Break clauses: Check if there are any break clauses in the lease, which allow you to end the lease early, and if so, under what conditions.
- Repairs and maintenance: Understand who is responsible for repairs and maintenance of the property and whether any works need to be carried out before you move in. If you are leasing only part of a building your landlord may be responsible for carrying out structural repairs and external decoration, but you may be required to contribute towards these costs under a service charge.
- Insurance: Check if you need to take out additional insurance cover for the property, and whether the landlord will require proof of insurance. The landlord will usually insure the property itself but you may have to insure the plate glass/shop front and will have to arrange your own insurance for your own contents/machinery or equipment.
- Restrictions: Check if there are any restrictions on the use of the property, such as a prohibition on subletting or carrying out certain types of business. You may need to obtain planning permission for the use of the property for your business purposes.
- Alterations: Understand if you are permitted to make any alterations to the property and if so, whether the landlord will need to approve them.
- Right to a new lease: there is an automatic right for the lease to be renewed at the end of the term, subject to certain exceptions such as the landlord demonstrating an intention to develop the property (“security of tenure”). Check if the lease contains provisions for the lease to be “contracted out” of this protection.
- Legal advice: It is always wise to seek legal advice from a solicitor before signing a commercial lease, to ensure that you understand all of the terms and conditions and that your rights are protected.
If you are looking at taking on a commercial property lease, please contact a member of our friendly Commercial Property Team on 01904 624903 and they will be happy to help guide you through and support you with your acquisition.
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