10 Things You Need To Know When Leasing A Commercial Property

If you have a commercial property and you are going to lease it to a business, there are a number of things you will need to consider. There is a Landlord Code which has been developed following discussions by landlords, tenants and government representatives too.
It can be a useful starting place for both tenants and landlords to use when negotiating a lease or a lease renewal. However, to ensure that there is proper legal protection in place for both parties, it is important to use a specialist commercial property solicitor to prepare or review the lease for you.
The 10 points to consider when letting your commercial property are:
1. Lease negotiations – You should try to be as flexible as possible when undertaking negotiations with a new tenant, maybe providing alternative lease lengths or terms if required.

2. Rent Deposits – your lease should include how much rent deposit you require and whether it will accrue interest. Your tenant’s deposit should be protected from you becoming bankrupt or insolvent.

3. Term of Lease and Break Clauses – you must put any offer in writing and be clear about the length of the lease. If you include a break clause, which is normal, you should include a condition that their rent must be up to date, that they vacate the premises and do not have any sublet arrangements in place at the time of the break.

4. Rent Reviews – you will need to be clear about any rent reviews in the lease and state that a rent review can be started by either party.

5. Sub-letting and Assignment – your lease should include clauses on assignment and sub-lets. Assignment is where your tenant can apply to you to assign their lease to a new tenant. Sub-let tenants do not have protection under the Landlord and Tenant Act 1954 and do not need to be on the same terms.

6. Service Charges – The cost of any service charge must be in writing and it must be a ‘best guess’ of what charges your tenant will face throughout their lease.

7. Repairs – to save any disputes, be clear about what repairs you expect your tenant to undertake or else you may find your property in dilapidation. Your tenant should give back the property in the same state they received it in.

8. Alterations – any alterations and change of use must be agreed by you, the landlord, and you must consider the value of your property. If your tenant wants to make alterations internally which are not structural, then you should not insist on giving consent, just that you are informed of the work.

9. Insurance – if you are insuring the property for your tenant, you must make sure that the policy is of good value, fair and also with a respectable insurance company and if you are receiving a commission, you need to disclose this to your tenant.

10. Management – you will need to ensure that you have an idea of your obligations for the ongoing management of both the property and your tenant, always giving reasonable notice and time for your tenant to provide you with what you need.
Whilst this guide can provide you with some useful pointers regarding what is involved in being a commercial landlord, you should not dismiss the value of a commercial property solicitor who can ensure that you protect yourself from any errors.
For more information about this article or any aspect of our commercial property legal services, please call Ingrid Hindle in our Warminster office on 01985 214444, or Sarah Gratton in Westbury on 01373 865577, or email ihindle@mulaw.co.uk or sgratton@mulaw.co.uk and we will be delighted to help you (there is no charge for initial telephone discussions).