How do I negotiate a commercial lease?

A commercial lease consists of a legally binding contract between a business tenant and a landlord. When taking on a new lease as a tenant, it is essential that you fully understand the rights and obligations that you will be facing in order to avoid unpleasant consequences. 

Renting a new commercial space is a big step for any business, but it is also extremely easy to make mistakes that could lead to future disputes. When setting the terms of a new lease, however, there are few things that you can negotiate that will help avoid common pitfalls.

Rent-free periods

It is sometimes possible to negotiate a rent-free period, especially when signing a longer term lease. This time may range from 3 to 12 months in length, which you can use to cover the cost of fitting out works or repairs to the property. We recommend requesting the longest possible length of rent-free right from the start of your negotiations. 

Terms

This refers to the length of time you agree to occupy the property or commercial space. Leases can cover any fixed period of time, so it is vital to determine an appropriate timeline and come to an arrangement that suits your business and personal financial situation at the time of signing the contract.

Break Clause

A break clause gives you the flexibility to end your obligations and move to a different space. It allows you to end your lease before the expiry of the contractual term by giving your landlord an agreed period of notice, which you can negotiate.

Maintenance obligations

Don’t forget about your repairing liabilities; tenants are responsible for the maintenance and upkeep of the property rented. You should consider the extent of repair imposed and negotiate the standard of repair required. If the spaces you are renting is not in great condition, for example, you could try to limit your obligations from the very start.

Rights to alter the property

Alterations to the property are generally prohibited under standard lease conditions. However, you may require internal alterations to suit your business needs over time. Make sure you understand your rights and permissions throughout the initial negotiations. 

Sub-letting

A sub-letting clause can be advantageous at the very beginning and throughout the term of your lease as an extra source of income for your business. We recommend seeking your landlord’s consent to sub-let the property to retain as much flexibility as possible.

How we can help

Due to the complex nature of commercial property law, it is worth appointing a solicitor at the beginning of the negotiations process to ensure that you come to a favourable agreement. 

Are you taking a new commercial lease for your business location or need to extend and negotiate an existing term? Our commercial solicitors in Manchester help businesses throughout the entire commercial lease process, from the drafting and negotiating to the extension or termination. We have in-depth knowledge of this area of law, having helped many businesses in Manchester and the Northwest, including leading offices, restaurants, takeaways and retail stores.

Contact our team on 0161 835 2446 to book a consultation with us.