Taking on a commercial lease for tenants is a significant step for any business. It’s not just about rent, understanding the legal and financial implications before signing is crucial. The terms agreed at the outset can have long-lasting effects on your business operations, costs, and flexibility.
Here are some of the key legal considerations tenants should review before acquiring a commercial lease.
Planning permission and permitted use
Ensure that there is appropriate planning permission for your intended use of the property. A lease may specify permitted use, but this does not automatically mean planning consent has been granted.
Without the correct permissions, the local authority may take enforcement action, potentially restricting the intended use of the property. Confirming authorised use before signing a lease is essential.
Break clauses
A break clause allows a tenant to end the lease early if specific conditions are met. These conditions can be strict, and failure to comply may prevent the break from being exercised.
Review break clauses carefully to avoid unintended consequences and ensure the clause can be relied upon if your business circumstances change.
Repair obligations
Repair obligations define how much maintenance and repair a tenant must carry out. Many leases are on a full repairing basis, meaning tenants may need to return the property in a better condition than when they moved in.
Check whether your responsibilities include structural repairs or internal repairs only. Where a Schedule of Condition has been agreed a written report with photographic evidence shows the condition of the property when the lease commences, which limits the repair obligations and the Tenant would not be required to return the property in any better condition than as documented by the Schedule of condition, which limits the Landlord claiming for pre-existing disrepair when the lease comes to an end and this limits dilapidations claims.
Alterations
Tenants must know which alterations are allowed and which are prohibited. Undertaking works without the landlord’s consent can put a tenant in breach of the lease.
Understanding these provisions is important if you plan to fit out the property for your business needs.
Service charges
Properties within a larger building or estate often include service charges in addition to rent. These charges can vary depending on the size and complexity of the property.
Tenants should ensure service charge clauses are transparent and accurate to avoid unexpected costs.
Searches
Before taking on a commercial lease, carrying out property searches is highly recommended. Common searches include:
- Local authority search – planning permission, road adoption, enforcement notices
- Drainage and water search – connection to mains services
- Environmental search – flood risk and contamination
- Chancel repair liability search – historic chancel repair contributions
These searches help identify potential risks and allow tenants to make informed decisions.
Why choose Lewis Denley Solicitors
Understanding the legal aspects of a commercial lease is crucial to protecting your business.
Our Real Estate team includes Louise Hollow, a Commercial Property Solicitor, who advises businesses on all aspects of commercial leases and property transactions. Louise works closely with clients to ensure leases are clear and commercial objectives are supported at every stage.
We provide guidance across Horsham and Sussex, helping businesses review leases thoroughly and make informed property decisions.
If you are considering taking on a commercial lease or would like advice before signing, contact our team today on: 01403 456430 to speak with Louise Hollow or a member of our Real Estate team.