What to Look Out for When Taking a New Lease

Taking on a commercial lease for the first time can be daunting. Steve Petty, commercial property lawyer offers these helpful tips for any business owner taking on a new lease.

When negotiating a lease of new premises you should involve your lawyer at the earliest possible stage. Ideally, your lawyer should negotiate heads of terms on your behalf as renegotiating a deal after heads of terms have been drawn up can sometimes prove difficult. Without an understanding of your proposals for the property, your lawyer cannot advise you properly.

There are a number of different matters your lawyer should consider on your behalf but ensure as a bare minimum that you address the following:

Condition of the property. The repairing obligation in a lease can result in enormous expense for a tenant. You need to establish the current condition of the property and employ a specialist building surveyor if necessary to prepare a report advising you of any areas of disrepair. Once you have this information your lawyer can negotiate the terms of your repairing obligations in the lease to ensure that the responsibility for repairs is balanced fairly between landlord and tenant.
Alterations. Explain in some detail to your lawyer what alterations you intend to make to the premises including changes to any signage or shop front. It is essential that consent for all your fitting out works is obtained before you enter into a lease to avoid an expensive application for consent having to be made (and possibly refused) once the lease has started
Use. You lawyer should establish the exact nature of your business to ensure the premises have planning consent for your proposed use. You may need to make a planning application for change of use before you can commence trading.
Service Charges. If you are leasing part of a building or a unit on a business park, there is a good chance you will be required to pay a service charge. Service charges can cover an enormous range of expenditure and it is frequently difficult to assess the likely level of service charge in the future. If possible always seek to have a service charge fixed or capped.
Termination Rights. A lease is a major commitment as it obliges you to pay rent usually for a number of years even if you no longer wish to stay in the premises. One solution is to negotiate the right to terminate the lease at one or more points during the term. Landlords frequently try to resist granting you termination rights and may attempt to attach all sorts of conditions which make it difficult to exercise these rights and your lawyer should negotiate the exact wording of these rights in the lease.

Make sure the lawyer you use has experience of drafting and negotiating commercial leases, a specialist will always spot things the generalist solicitor might miss.

Contact Cousins Business Law for advice on this topic.

Read more:
The end of the lease is nigh

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