What Do You Need to Know About Taking on a Commercial Lease?
Jun 1, 2016
Taking on a commercial lease is a big step for your business and there are many things to consider. Some of these are about suitability for your business and some are about the lease. We’ll look at some of these considerations for you so you’ve got some information to start with.
When you take on a commercial lease there are a few things to be aware of. They are:
- Check the property use class
The local authority defines the use of all commercial property in its area. It’s really important to check the class of the property you are leasing before you sign the lease. It is possible to change the use of a property, but if the application is denied you are tied into a lease you can’t use.
- How long is the lease?
Most commercial properties have longer leases such as 10 or more years. If you’re a start-up you’ll probably not want to tie yourself into such a long lease. But you could negotiate a break clause into the lease, which will give you the option to break the lease earlier and with no penalties. The other consideration to make when entering into a lease is whether there is the option to sublet. This offers you another way to leave the lease without penalties. But you should remember that you will still be responsible for the payment of the rent and the terms of the lease even if you are subletting.
- Security of tenure
Security of tenure allows you to remain in a property when the lease has ended and applies to most commercial leases that are longer than 6 months unless it has been specifically excluded. This right was introduced in the Landlord and Tenant Act 1954 and you should ask your solicitor to specifically check if this clause is included or not. This may indicate that the landlord has plans for the building if security of tenure is not included in your lease.
- Location, location, location
It’s important to think about location. Do you need your customers to come and see you? If so, do you have parking and are you located in an easy-to-reach location? Do you need to employ staff? If so, is it easy to get to by public transport and car? Think carefully about whether the location will work for you before you commit. The price of prime property will be higher than that in a not-so-perfect location, but you’ll need to decide how important the location really is.
- Size of property
If your business is growing fast, leasing a property you fit into now may not be the best option. You’ll need to make sure it’s fit for purpose now but also for the remainder of your lease.
These are a few considerations you should think about when leasing a commercial property, but perhaps the most important is to seek advice from a commercial property specialist solicitor. If you need help, please call Christopher Taylor on 01264 325815, email: firstname.lastname@example.org or contact us online and we’ll be happy to help.
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