With the New Year approaching, now is a popular time for Tenants to review their current leases, consider their options for renewal, and even enter into new leases.
If you are a tenant or prospective tenant falling into any one of these categories, below are some of the key provisions you need to consider before agreeing and signing a lease.
- Property Description
- Are you renting part of the property or the whole of the property and is this properly defined by reference to a clear plan?
- Does it include car parking spaces or a right to use them?
- What are your access rights (to and from the property)?
- Lease Term
- When do you intend on entering into the lease?
- How long do you want the lease to last e.g. short term (3-5 years), long term (10-20 years) or very long term (999 years)?
- Permitted Use
- What do you want to use the property for, and is the property suitable for that purpose?
- Does the lease accurately reflect this?
- Is this use authorised under planning legislation?
- Do you have authority to use the property for any other purpose?
- What is included as rent e.g., annual rent, insurance rent, service charge etc.?
- What is the proposed rent? Is it reasonable for the size and nature of the property and the location?
- Will you be charged Value Added Tax (VAT)?
- How often will rent payments be made e.g., monthly, quarterly etc.?
- What is the method of payment e.g., bank transfer, cheque etc.?
- Are you required to pay rent immediately or is there a rent free period?
- Is there provision for the rent to be reviewed during the term to and if so on what basis?
- If the property is damaged or destroyed, does the lease allow for the rent to be suspended until the property is reinstated?
- Repair Covenants
- What are your obligations under the lease?
- Are you solely responsible for repairs, or is the Landlord responsible in certain situations; for example, in the event of damage by an insured risk?
- Who is responsible for the cost of repairs?
- Can you assign or sub-let the lease? If so, is the landlord’s consent required?
- Have you fully considered the user covenants and any provisions relating to alterations?
- Early Termination:
- Is there a break clause and if so what are the conditions for termination, including any notice periods?
- Do either or both of the landlord and tenant have the right to end the lease?
Please note, although the above list sets out some of the main provisions, this list is not conclusive and there will be other provisions you need to consider; for example, registration of the lease at the land registry, and insurance obligations.
For further information, please contact our commercial property team on 0113 202 9550, who have a wealth of expertise and will ensure you fully understand the structure and content of the lease and the use of any schedules.