Taking on a commercial lease is one of the most significant commitments a business will make. Whether moving into new offices, opening a retail unit, or leasing industrial space, the fine print of a lease agreement can have long-term financial and legal implications.
So what are the key issues businesses should be looking out for before they sign? According to commercial property experts, three questions consistently come up:
1. Rent and financial obligations
It might seem obvious, but rent is rarely as straightforward as a headline figure. Leases can include rent reviews at set intervals and penalties if payments are late. On top of the base rent, many agreements also include service charges and insurance rent, which can significantly increase the overall cost. Businesses need to budget carefully and understand the total financial commitment, not just the monthly rent.
2. Repair and maintenance responsibilities
Who is responsible for repairs and upkeep of the premises is another crucial point. Some leases — particularly full repairing and insuring leases — place the entire responsibility on the tenant. That can mean covering the cost of major repairs, even if the property was not in perfect condition at the start of the lease. Without checking the detail, tenants risk being caught out by unexpected bills.
3. Lease duration, renewal, and exit options
Flexibility matters. Businesses should understand how long they are tied in, whether there are break clauses that allow early exit, and what rights they may have to renew the lease at the end of the term. The Landlord and Tenant Act 1954, for example, provides some tenants with security of tenure and automatic renewal rights — but it does not apply to every lease. Knowing whether those rights apply is vital for long-term planning.
Expert advice matters
“These three areas represent the main concerns for both tenants and landlords when navigating commercial leases,” said Tom Warrender, partner in the commercial property team at Wilson Browne Solicitors. “That is why expert legal advice is so important — it ensures businesses go into lease agreements with their eyes open and avoid costly pitfalls.”
Wilson Browne Solicitors, recognised by The Legal 500 for its commercial property expertise, has published a comprehensive guide to the different types of leases businesses may encounter.
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