What Is a Commercial Property Lease?
A commercial property lease is a legally binding agreement between a landlord and a tenant for the rental of a commercial property. It outlines the terms and conditions of the lease, including the amount of rent charged, when the rent will be paid, the length of the tenancy, whether it is a fixed term or a term that can be renewed periodically, the types of business can be carried out in the property. A lease agreement should also include details regarding the responsibilities, and rights of both parties.
Ensure The Property Fits Your Business Requirements
Commercial properties are generally classified into five main categories: offices, retail units, industrial buildings, leisure, and healthcare. Local councils are responsible for determining the property’s usage classification, and ensuring you have all the necessary permits and licenses to operate your business in that location is crucial. Failure to comply with license and usage regulations may lead to legal issues and potential disruptions to your business. Our specialist commercial property solicitors can assist in all areas of commercial property and lease reviews to ensure the property is suitable for use and that you meet your obligations.
How Long Is a Typical Commercial Property Lease?
The length of a commercial property lease may vary, depending on the terms agreed upon by the landlord and the tenant. The lease could run for a few months or extend to several years. Generally, businesses that require stability and long-term planning tend to opt for longer leases.
Review the Lease Terms and Conditions
It is important to thoroughly review the lease agreement and understand its terms and conditions. Be sure to pay attention to details such as the duration of the lease, the rent amount and payment schedule, maintenance responsibilities, renewal options, and any additional fees or charges. Commercial lease agreements can be lengthy and complex, so it is advisable to seek legal advice from a regulated professional in this area of law to ensure that you fully understand your rights and obligations as a tenant. Rose & Rose provides legal services for both landlords and tenants and has extensive experience in reviewing, drafting, and negotiating favourable lease agreements.
What is Security of Tenure?
If a lease falls under the Landlord and Tenant Act 1954 part II, a commercial tenant is granted ‘security of tenure’. Protections under this legislation mean that the tenant has the right to renew the lease under similar conditions at the end of the term and stay in the property. However, this renewal is subject to reasonable modernisation and a new market rent. The Act is in place to protect commercial tenants so that they cannot be evicted without the landlord following the strict procedures of the Act, provided the tenant adheres to the terms of their lease. However, there are circumstances under which a commercial landlord can refuse to renew the lease, which includes:
- If the tenant agreed to give up the right of renewal when the lease was originally taken on.
- The landlord wants to occupy the premises themselves.
- The landlord wants the property back for development purposes.
- The tenant is in substantial breach of the terms of the lease — such as, a history of non-payment of rent, or not complying with lease or maintenance obligations.
- If a premises has been split up by subletting into several units and the whole premises would command a higher rent if let together under one lease.
If the landlord wishes to bring the current tenancy to an end, the landlord must serve the tenant with a Section 25 Notice followed by a local county court application.
Some leases sit outside the Landlord and Tenant Act 1954, in which case, there will be no automatic right to a new lease and the existing lease will come to an end at the end of the term. Typically, these include:
- Tenancies where the term of the lease is for 6 months or less (unless the lease allows for an extension).
- Where the tenant’s total period of occupation does not exceed 12 months.
- Agricultural tenancies.
- Tenancies at Will.
- Contracting out of the Act.
Commercial Property Specialists
At Rose & Rose, our team of experienced commercial property solicitors can assist you with all aspects of commercial property and commercial property leases. We can assist with a wide variety of matters, including:
- Sales and purchases.
- Granting and taking of leases.
- The letting of commercial property.
- Property acquisition and disposal.
- Option and development agreements.
- Renewal of leases.
- Rent reviews.
- Advice on landlord and tenant matters.
- Commercial mortgages.
- Advice in relation to licensing matters on behalf of pubs, hotels and clubs.
We are committed to helping you find effective solutions for your commercial property matters. Contact us today to discuss your unique situation to discuss the best way forward for you, and we will provide you with further and specific advice tailored to your circumstances.
This blog post is not intended to be taken as advice or acted upon. If you are seeking legal advice, please get in touch with our team of solicitors.