Tenant FAQs
What are my rights as a commercial property tenant?
As a tenant your rights will be largely regulated by the lease (which is a matter for you to negotiate with your landlord and for your solicitor to advise upon and formalise for you) and also partly regulated by law – perhaps most significantly security of tenure rights. In the abs ence of agreement to the contrary most tenants will have security of tenure, meaning that except in certain circumstances at the end of the initial lease a tenant will be entitled to a new lease on the same terms (except for rent which can be negotiated or determined if agreement cannot be reached).
From a tenant’s perspective it is always better to have security of tenure, but if your lease contains provision for open-market rent-review that may lead to a greater rent increase on review.
Aside from rent, are there any other costs associated with renting a commmercial property?
Again this will be largely determined by your lease, and again is a matter for you to negotiate with your landlord and for your solicitor to advise upon and formalise for you. Your landlord may want you to pay towards maintenance and insurance costs, which may be unlimited.
Your lease will almost certainly oblige you to maintain the property to a certain standard, and so the costs of maintenance needs to be considered. Failure to comply with your maintenance obligations can lead to an expensive bill at the end if the landlord has to bring the property up to the appropriate state.
Some costs sit outside of the lease – in many cases stamp duty land tax is payable on the grant of a new lease, and in addition you would normally be responsible for outgoings such as services and business rates.
From a tenant’s perspective it would be better if the maintenance and insurance costs and the repair obligation were limited – your solicitor will be able to advise you about this.
What is a break clause and do I need one in my commercial property lease?
It is possible for a lease to contain a clause allowing either the landlord or the tenant, or both, to break the lease early before the whole lease term has expired.
From a tenant’s perspective, a tenant-only break clause can be very advantageous if the tenant’s plans are not entirely certain – allowing the lease to be ended early if all does not go according to plan. A landlord may want to be compensated if the lease ends early, and this would be a matter of negotiation, as would other conditions for the break, such as the notice period.
A landlord-only break clause, or a mutual break clause, is potentially disadvantageous to the tenant since the tenant subject to the notice period, would need to find alternative accommodation if the landlord were to break the lease.
Landlord FAQs
I’m renting out a business property as a landlord, what are my responsibilities?
As for the tenant this would be largely regulated by the lease (which is a matter for you to negotiate with your tenant and for your solicitor to advise upon and formalise for you) and partly regulated by law – obligations relating to safety, for example.
Matters such as responsibility for maintenance should be agreed at the outset, as should the tenant’s contribution towards any landlord’s costs in carrying out the landlord’s obligations. Buildings insurance is almost always the responsibility of the landlord, although commonly landlords would want tenants to cover the cost of insurance.
I own a property that I want to rent out, how do I calculate commercial rent in the UK?
You would need to look at rents charged in the area for property that is comparable in nature. If you are in significant doubt, you could consider taking advice from a local agent or surveyor.
When do I need a commercial property solicitor?
The services of a commercial property solicitor are best engaged as early in the process – ideally before terms are finalised. A decent commercial property solicitor will be able to advise you of the many factors to consider when negotiating the terms of your lease – better than getting the advice later and having to try to back-track on previously agreed terms.
After terms have been agreed a commercial property solicitor will be able to negotiate and advise you on the detail of the lease. Often significant points – with significant consequences – can turn on a few apparently insignificant words. Engaging the services of a commercial property solicitor will ensure that you negotiate the best possible position and do not inadvertantly make a costly mistake that you live to regret.