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Commercial Property - Tips for Tenants when negotiating a Lease

Imagine… you have just found your dream commercial unit. It could be a new shop, restaurant, or office and now it’s time for the negotiation to begin…

No doubt you have already carefully considered the affordability of the rent but there is much more to think about when negotiating the terms of a commercial Lease. This short blog will look at a few important aspects to consider but if you are interested in discussing commercial Leases further, then please contact our Commercial Property Team who would be more than happy to help.

Service Charge Caps

As you may or may not know, most leases will contain service charge provisions that require the Tenant to contribute towards the cost of repairing and maintaining the building & any common parts/services. The Lease will usually set out the mechanics of the service charge position and will usually define the Tenant’s proportion. Some Leases will refer to a ‘fair and reasonable’ proportion, whereas others will specify percentages. In any case, you may want to consider inserting a service charge cap to ensure that your contributions don’t exceed a certain figure each year. This gives you peace of mind when it comes to calculating your annual expenses.

Alterations

Landlords will often seek to limit Tenants in respect of what they can do to the property during the term of the Lease. It may well be that the property is perfectly fit for purpose but often Tenants want to carry out their own alterations. It is common for there to be a prohibition on structural alterations but if you plan to undertake non-structural works, you should ask your solicitor to ensure that the Lease allows for these.

Alienation

When you first take the Lease, you will undoubtedly be excited about the future of your business, but you should also think carefully about what will happen if things don’t go to plan. You may want to be able to share the office space with another company and if so, you need to make sure this is suitably provided for in the Lease. You will also want to have an option to assign your Lease to a different person/company in the future. You should speak to your solicitor about the alienation provisions in the Lease, as you want to be able to assign as freely as possible.

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About the Author
Molly Perez-Sphar, Associate Partner, Head of Commercial Conveyancing

Specialises in: Commercial Property, Residential PropertyRetail, Hospitality & Leisure

If you require any further information on waterways, or would like to speak to someone regarding a similar matter, please contact Molly Perez-Sphar at Comptons Solicitors LLP. (mps@comptons.co.uk / 020 3869 4460)