Negotiating a Commercial Lease

Negotiating a Commercial Lease

Whilst each lease will be specific to the individual property, there are certain key topics that must always be considered:


Leases can be for any fixed period of time so both parties should consider how long they wish the arrangement to last. Further, legislation provides that business leases are automatically renewed at the end of the term, if the tenant wishes to stay in occupation. Landlords can remove this right before the lease is granted or they can object to the renewal if certain grounds can be shown.


This is normally paid quarterly or monthly in advance at a predetermined level but is often subject to review after an agreed period. It may be possible to negotiate a rent free period to cover the cost of fitting out works or repairs to the property. VAT can be charged on rent and this may have a significant impact if you are unable to recover VAT.

Repair and Condition

Whether directly or via a service charge, tenants are almost inevitably responsible for the maintenance and upkeep of the property. This applies regardless of the condition of the property at the start of the lease, unless a Schedule of Condition can be agreed.


These are normally prohibited under standard lease conditions so if the tenant’s proposed fitting out works are of more than a superficial nature, permission should be considered as part of the initial negotiations.


Commercial buildings are subject to much legislation and regulation. This includes undertaking an Asbestos survey; carrying out a Fire Risk Assessment; making the property suitable for disabled employees or customers; assessing the Energy Performance of the building. Responsibility for compliance should be agreed between the parties before the lease is signed.

Leasehold Disputes

Over the term of the lease, disputes may arise between the landlord and the tenant on a number of issues

Rent Arrears and other Breaches of Covenant

Advice should be sought as soon as possible once a breach is suspected. The actions of the landlord or the tenant can have a significant impact on any claim for breach against the other.

Forfeiture and Possession Proceedings

The landlord may seek to bring the lease to an early end because of the action or inaction of the tenant. Both parties need advice on how to proceed in this area to avoid making matters worse.

Dilapidation Claims

At the end of the lease, there is often a dispute over the condition of the property and we can offer pragmatic advice at this stage to avoid unnecessary aggravation.

General Lease Issues

We can provide advice to both landlords and tenants on issues such as:


When the tenant sells the lease onto another party, the consent of the landlord is inevitably required and a Licence, together with an authorised guarantee agreement, will need to be prepared.


Any sub-letting will require a Licence from the landlord and the terms of the sub-lease must be carefully considered to ensure compliance with the terms of the existing lease.

Rent Deposits & Personal Guarantees

If the landlord has any doubts about the ability of the tenant to pay the rent and otherwise comply with the lease, it is not uncommon to see these additional measures requested.

Lease Renewal

At the end of a lease, both parties may wish to continue the arrangement. If the lease is a secure lease, the landlord may have no choice in the matter. Either way, the new lease must be negotiated as it was at the outset, although it is usually a more simple exercise as the old lease is used as starting point.

Rent Review Negotiations

At predetermined intervals under the lease, the rent will be increased. This can often be agreed swiftly but in the event of dispute, we can assist.

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Please note the above is for information purposes only and is intended to be a short summary.  It should not be treated as a comprehensive guide and should not be acted on without qualified legal advice.