What every business should know about Commercial Leases
Brighton & Hove is famous for its dazzling shops, unique restaurants, and boutique hotels.
Commercial property law is complex, and if you are looking to set up a business or move premises, it is vital to get the right terms on your commercial lease. If you end up with unfair terms that do not work for you and your business, you could find yourself in a legal dispute with your landlord. Business owners have enough to worry about without their lease causing problems.
As one of Brighton & Hove’s oldest and most established Firms, situated just a stone’s throw from the famous Palace Pier, we have been helping our clients get the right terms in their business lease for over 125 years. We know how important it is for business owners to get their lease right to ensure that they get the best out of the premises.
Your commercial property lease should work for you and your business.
How does a business lease work?
A commercial lease sets out the terms under which you can occupy the premises.
Commercial leases tend to have more room for negotiation than a residential lease, because a business owner is more likely to have specific needs. For example, if you are a hairdresser, you may need to ensure that the lease allows you to install sinks to wash your clients’ hair.
It’s important to use an experienced commercial property team who will take the time to understand your needs and review the lease carefully to make sure there aren’t any terms that will affect your business negatively.
A commercial lease will cover many aspects of your tenancy, including:
- What kind of business can be conducted in the property
- What kind of alterations can be made to the property
- The repair, decoration, and maintenance you must carry out
- The length of time the property is leased for (known as ‘the lease term’)
- How much the rent will be and when it will be paid
- Improvements the tenant is responsible for
- Improvements the landlord is responsible for
- Who is responsible for insurance of the property
- Any restrictions and consequences for damage to the property
- Whether the property can be sub-let
- Whether the lease can be assigned to someone else if you wish to give notice early
- Notice owed to terminate the tenancy and if any provisions required to provide notice
Maximise Your Lease
If you are considering a Commercial Lease you should have it checked by an experienced solicitor. Our 5-star rated property team have put together this guide to provide you with our top tips to make the most out of your Commercial Lease.
How is rent paid on a commercial lease?
The terms of how much and when your rent will be paid will be set out in the lease. Commercial property rent is often paid in quarterly instalments over the year, such as March, June, September, and December. If you would prefer to pay your rent in different instalments, speak to us about how we can negotiate this with your landlord.
Some retail leases ask for a percentage rent, in which a shop will pay their base rent in addition to a percentage of their gross income. In other leases, the landlord may ask that the tenant be responsible for paying specific expenses. Your solicitor will explain to you what the lease requires and speak to you about whether you are happy to sign the lease on the terms requested.
What if I want to exit my lease early?
You may be able to terminate your lease before it is due to end, but only if the lease contains a break clause. A break clause allows for a tenant to terminate the tenancy early without facing a financial penalty. Usually the break clause requires tenants to give at least two months’ notice to end the tenancy early.
Perhaps you’ve moved your business and have some reservations over the area you’ve moved to, or you’re unsure if the building suits your business. Having a break clause allows you to get out of the lease early and move elsewhere.
Alternatively, you may wish for your lease to allow you to:
- Sublet the lease to a third party
- Assign the lease to someone else
If you would like to find out more about how you can negotiate this in your lease, speak to our expert commercial property team.
Do I need a solicitor to review my commercial lease?
It is highly recommended that you use an expert commercial property solicitor to review your lease before you sign it.
You should use a solicitor if you want:
- to avoid complex legal disputes with your landlord
- to avoid hidden costs in the lease
- to ensure that you can make any changes you want to the property
- to ensure you can use the property as you wish and not be penalised
- to negotiate the best terms possible for you and your business
The lease is likely to require you to maintain and repair the premises. It may require you to put the premises in to a better condition than when your business moved in. The financial burden and penalties can be severe. It is very important that you understand the obligations imposed on you covering repairs and maintenance of the premises.
Commercial property law is complex and can be a minefield of potential issues if you do not seek advice from an experienced commercial property solicitor. Our expert commercial property team deliver a high-end legal service to business owners. We deal with the complexities of commercial property on our clients’ behalf, so that you can get on with what is important: running your business.
Our Solicitor was a delight to work with, we never waited long for a reply. It felt like such a breeze to be her client, and she acted quickly in sorting our problem. Very professional and approachable. We were so pleased with their work we decided to make BB&C our conveyancers.