Commercial Leases


What is a commercial lease?

A lease is a written contract entered into by a landlord and tenant, whereby the tenant makes regular payments to the landlord, in return for occupying all/part of a property, usually for an agreed number of years. The lease governs the rights and obligations of both parties and therefore it is essential to ensure all the terms are not only reviewed and understood, but they are also… reasonable.

Landlord v Tenant…not quite

It is inevitable that the parties will have different priorities, and will want to protect them. However, this need not compromise the landlord-tenant relationship.

Negotiation is key, although what is negotiated and agreed in each case will depend on the specific circumstances of the landlord and tenant involved.

What are the key provisions?

Again, these depend on the circumstances under which the lease is being entered into, but the main ones are set out below.

  1. Term of lease:
  • How long is the lease going to last e.g., short term (3 years), long term (10-20 years) or very long term (999 years)?
  • Key dates – When does the lease start and finish?
  1. Payment of rent:
  • What is the agreed rent? Is it reasonable?
  • How often will rent payments be made and how will they be made?
  • Will there be any rent-free periods or is rent payable immediately?
  • Will the amount of rent payable be reviewed, where the lease is long term? If so, how often will rent reviews take place? What is the process for agreeing the new rent?
  • Will the rent be suspended under certain circumstances e.g., where the property is damaged/destroyed?
  1. Service Charge:
  • What is included in this?
  • How often is it paid?
  1. Value Added Tax:
  • Has an election to waive exemption to VAT been made (the option to tax), and if so, what is the consequence of such an election?
  • Have VAT (and other) implications of any reverse premiums and rent-free periods been considered?
  • Is there to be an agreement for the payment of legal costs incurred on the grant of the lease?
  1. SDLT (Stamp Duty Land Tax) and Registration:
  • What is the rate payable and how is it calculated?
  • Does the lease need to be registered at the Land Registry either with its own title or noted on the landlord’s registered title?
  1. Repair covenants:
  • What are the respective obligations of the tenant and landlord under the lease?
  • Who is responsible for repair costs?
  1. Alienation:
  • Can the tenant assign or sub-let the lease? Is the landlord’s consent required?
  • Have the user covenants and provisions for alterations been given full consideration?
  1. Termination:
  • What are the conditions for termination, including notice periods?
  • Do either or both of the landlord and tenant have the right to end the lease?

Why Barton Legal?

Whether acting for Landlord or Tenant, we will use our wealth of expertise to ensure you fully understand the structure and content of the lease and the use of any schedules. Our dedicated team will provide you with clarity from the outset, so you are confident as to the likely costs involved, and the timescales.

SamT6001 leases
Trish Barton


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