Commercial Property FAQ

Should I contact a specialist solicitor for advice?

The lease is a legal contract between you and the landlord and failure to abide by the terms of your lease could lead to court action. It is therefore highly advisable that you employ specialist commercial property solicitors from the outset.

I have found new premises – what are the next steps?

Once you have found new premises for your business, you will need to negotiate the terms of a commercial lease with your landlord.

This lease is a legal contract and failure to abide by its terms could lead to court action. It is therefore highly advisable that you employ commercial property solicitors from the outset so that they can:

-prepare the Heads of Terms which summarise the terms for a new lease agreed between you and your landlord which is used in the preparation of the lease -review and make any necessary amendments to the lease to ensure it does not contain any detrimental terms – the first draft of the lease is generally prepared by the landlord’s solicitor and is consequently weighted in their favour

How long should I rent for?

Commercial leases are rarely granted for longer than 10 or 15 years and there is typically a tenant break clause option from the beginning of year five, enabling you to terminate the lease. Try and negotiate a break clause if there is not one and also check the small print as tenants often have to comply with all lease obligations before they can exercise a break clause and your landlord could refuse simply on the basis of failing to redecorate or carry out minor repairs to the property, for example. When the lease does expire, you will almost certainly have an automatic right to renew unless your landlord needs to occupy the premises for his own business purposes or has plans to demolish or redevelop the property.

How much rent can I expect to pay?

Find out the average rent for similar properties in the area something a solicitor can assist you with. Most landlords expect tenants to pay rent for the next three months in advance so ask them if they will allow you to pay rent monthly in advance. You should also check if the rent will be vat able and whether you can claim it back. If you wish to make changes to the premises most landlords will agree to a rent-free period to compensate for this cost.

Should I seek advice from commercial property solicitors?

The lease is a legal contract between you and the landlord and failure to abide by the terms of your lease could lead to court action. It is therefore highly advisable that you employ specialist commercial property solicitors from the outset.

Are there any other charges and costs to consider?

Yes. These include annual insurance costs for the premises, local authority commercial rates, property taxes on the lease and utility charges (electricity, telephone, gas, water, etc.). If the premises form part of a larger building such as a shop in a retail outlet or office in a block, you will also be liable for an annual service charge which covers the cost of maintaining and repairing shared areas of the building such as visitor areas, driveways, landscaping, kitchen facilities, etc., Ask the landlord for the average year’s service charge and how this is calculated, as well as the last three years’ service charge accounts so that you can negotiate a cap on the amount.

What about repairs to the premises?

Ask the landlord to carry out any immediate repairs before you take on the lease but establish who is paying for them. You may also need a surveyor to check out the condition of the premises. Most landlords will pass responsibility for their repairs, maintenance and replacement to their tenants.

What is a Service Charge?

This covers the cost of maintaining and repairing shared areas of the building such as visitor areas, driveways, landscaping, kitchen facilities, etc. if the premises form part of a larger building such as a shop in a retail outlet or office in a block. Ask the landlord for the average year’s service charge and how this is calculated and the last three years’ sets of service charge accounts so you can agree a cap on the amount. Commercial Property is a highly complex area of the law and there are many other terms of the lease including restrictions on transfers of the tenants’ interest in the lease, sub-letting, use, alterations, signage, etc. Contact specialist commercial property solicitors to ensure professional legal and valuation advice is sought from the outset.