Leasing Commercial Premises

By Sarah Secker

What are the key considerations for a landlord granting a lease of a commercial premises?

Full repair obligations: obliging a tenant to keep the premises in good and substantial repair.  A landlord should expect resistance to this if the premises are not already in a good and substantial state of repair and/or the tenant is only taking a short-term lease. 

Internal/external letting: if the landlord is letting individual parts of a building to various tenants (for example, leases of floors within a building) then it is usual just to let the interior of each area.  The structural and external parts of the building are retained by the landlord who retains responsibility for repairing and maintaining those parts.  The landlord obtains reimbursement from the tenant via a service charge. 

Rent reviews:  commonly there are ‘upwards only’ rent reviews every 3 to 5 years. There are different mechanisms to review rent and sometimes it may be referenced to the RPI (Retail Prices Index) or stepped increases may be agreed at the outset.

Fitting out works: usually undertaken by the tenant at the start of the lease term. A landlord may be asked for a rent-free period whilst such works are being carried out. Structural alterations are usually prohibited but internal non-structural alterations are often permitted with the landlord's consent.

Landlord’s mortgage lender’s consent: this must be obtained before granting the lease.

Landlord’s security: a rent deposit and/or guarantor may be used to provide security for the tenant’s performance of its lease obligations particularly with a newly established business. The tenant’s deposit must be kept in a separate account specifically for that purpose.

Please note these are general principles and each lease should be individually checked.  Contact Sarah Secker in the Commercial Property Department at Sampson Coward on 01722 410664 for more information and advice.

Sarah Secker