7 Top Tips For Negotiating A Commercial Lease

Whether you’re already renting a space for your business, or you’re on the lookout for a brand-new base of operations, there will come a point when you need to negotiate a commercial lease. Here are some important top tips…

As a business owner, you’ll undoubtedly have plenty of plates spinning at once. Whether it’s worrying about your finances, your employees’ wellbeing, or your client relationships, the list of tasks you’ll concern yourself with on a daily basis is likely to be never-ending.

One important task that will need your attention is to negotiate a commercial lease for your business to work from.

Commercial conveyancing can often be very tricky to navigate and, if you aren’t careful, your business can find itself tied to an unsuitable and costly lease. So, with that in mind, we’ve put together a list of important tips you remember when it comes to negotiating the right commercial lease for your business. Be sure to read below to find out more.

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7 Tips For Negotiating A Suitable Commercial Lease

Make Sure You Consider ALL Your Options

One of the most important pieces of advice to keep in mind when it comes to negotiating a commercial lease is not to rush into anything! It may understandably be tempting to jump straight into the first lease you find or to simply renew an existing one, but this isn’t necessarily going to be your best option – or the most cost-effective.

You must carry out as much research as possible before you consider agreeing to a commercial lease. Take a look at other similar properties to see what you can afford and what sort of benefits you may be able to receive. You can either use this information to pursue a brand-new lease or to get the upper hand in negotiating the lease you were initially interested in.

Consider The Entity Which Will Take On The Lease

The entity that takes on the commercial lease will be responsible for all of the associated tenant liabilities which, of course, includes the payment of rent, the service charge and responsibility for dilapidations.

You will need to carefully consider who will be taking on the lease. Do you want the lease to be in the name of your incorporated limited company? Or perhaps in your name as a sole trader. There are pros and cons to either choice, so make sure you consider what would be most beneficial for your situation.

Make Sure You’re Aware Of Any Break Clauses

A break clause in a lease allows either you, the tenant, or your landlord to terminate the lease early if certain conditions are met. Break clauses should be outlined in detail on the lease agreement, so it’s important to keep an eye out for them and how they might affect your lease, both in the short and long term.

Some break clauses may be favourable to you; other conditions may not be so kind. It’s vital that you assess if there are any existing break clauses in the lease and propose some if there aren’t any suitable ones. You don’t want to end up in a lease that you can’t get out of!

Agree On A Cap On Additional Charges

If you happen to be taking a specific type of lease, such as a multi-let building, there are likely to be common areas where you’ll be required to contribute to the costs of maintenance or insurance.

While this isn’t an issue in itself, you should be mindful of how these additional charges can mount up. It should be possible for you to negotiate a cap on such contributions at a fixed figure so that you know your liability cannot rise above this.

Keep An Eye On Your Repairing Obligation

Your commercial lease is likely to include details on your obligations for keeping on top of repairs. Where possible, you’ll want to focus on leases where you’re only obligated to look after the building’s interior.

The alternative to this is to agree to a lease that is limited by a Schedule of Condition. This is a record of the condition of the premises at the start of the lease, and you can make it clear that you do not have to put anything into a better state of repair by the time the lease expires.

Ensure Your Lease Falls Under The Landlord And Tenant Act 1954

It’s vital that you ensure your lease is within the parameters set by the Landlord and Tenant Act 1954. This means that, at the end of the term, you will always have the right to apply to the court for a new lease.

The landlord can object to your application, but only under certain, specific grounds.

Seek The Advice Of A Professional

Whenever you are negotiating a commercial lease, it’s strongly advisable to work alongside a professional in the area, namely a solicitor with commercial property experience. They can help you organize all the finer details related to your lease and ensure your rights as a tenant are well protected.

If for any reason you become embroiled in a dispute over your commercial lease, it may also be sensible to work with a legal professional who has litigation experience, so that they can provide robust representation if you end up in court to discuss the matter.

Are You Looking To Negotiate A Commercial Lease For Your Business?

So, there you have it! In this post, we’ve discussed 7 incredibly important tips you should always keep in mind when it comes to negotiating a commercial lease for your business. If it’s something you’ve never had to do before, it can be a little overwhelming at first, but if you keep these tips in mind you should be on your way to success.

Have you had any difficult experiences with commercial leases in the past? How did you overcome them? If you have any further comments, feel free to leave them below!

Disclaimer: Please be advised that this article is for general informational purposes only, and should not be used as a substitute for advice from a trained legal professional. Be sure to consult a lawyer/solicitor if you’re seeking advice on the law. We are not liable for risks or issues associated with using or acting upon the information on this site.