A commercial property lease generally applies to office, retail and industrial premises and typically lasts no more than 25 years.
The background
Commercial property leases are legally binding contracts between the owner (the landlord) and your business (the occupier) – it’s not something to be taken lightly so bear in mind that once you have committed to one, it’s not easy to change. Breaking a commercial property lease can also result in serious monetary penalties.
Questions to ask
Before securing a commercial property lease, ask yourself the following: is the property leasing period sufficient enough to meet your business’ growing needs and are there any obligations to undertake that could potentially harm or disrupt your business? Will the upkeep of the property and the facilities be maintained at an acceptable rate? Are the commercial property rent and any other associated charges such as outgoings at a level you are happy with and not excessive?
Need to know
Before signing on the dotted line, get all the paperwork checked out by a lawyer and a surveyor. Get a written response from your landlord to your query wherever possible, so you have a paper trail to refer to in the event of any misunderstandings.
Any landlord worth his salt will check you out too, by examining how credit-worthy you are, questioning the financial health of your business and seeking references. If there are any doubts over this, you may be required to offer additional security before securing a commercial property lease.
Top tips
Most commercial property leases are for a fixed term, although it’s worth investigating the inclusion of a break clause, allowing both you and your landlord to terminate the lease early in the event of certain conditions, such as a rent review.
Check out the website for the Code for Leasing Business Premises at www.leasingbusinesspremises.co.uk. It was set up to help businesses such as yours negotiate the best deal. The British Property Federation also has guidance on securing a commercial lease at www.bpf.org.uk
