- Leases
- 6 min read
Signing a Commercial Lease: A Plain-English Checklist
Ten things every business owner should check before they sign on the line.
A commercial lease is a long-term commitment. Get it wrong and you could be stuck paying rent for years on premises you can't leave. Here's what to check.
The basics
Before legal terms, get the commercial terms clear: rent, term, break options, repair obligations and who pays for what.
- Term — how many years are you committing to?
- Break clause — can you exit early, and on what notice?
- Rent review — how often, and capped or open market?
- Service charge — what's included, what isn't
Repair and dilapidations
A 'full repairing and insuring' (FRI) lease means you're responsible for the building, even if it's in worse shape than when you took it. A Schedule of Condition can limit this, so insist on one.
Permitted use and alterations
Check the lease lets you run the business you intend to run. If you might need to fit out the space, look for a sensible alterations clause, and be ready to negotiate it.
Security of tenure
The Landlord and Tenant Act 1954 gives most business tenants the right to renew their lease. Landlords sometimes 'contract out' of this, so make sure you know which you're agreeing to.
— The takeaway
Lease terms are negotiable until you sign. Get advice early and use the heads of terms stage to push back on anything that doesn't work for your business.
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