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Business Leases

Advice on specific issues

Are you getting expert advice?
Besides the risk of accepting hidden liabilities, everything is negotiable if you know how.

Is the lease for more than 10 years?

Short (5-10) year leases are the trend - give more flexibility.

Have you checked the 'going' rate for the location type of business?

An independent view strengthens your negotiating position.

'Full repairing' obligation?
If lease is under 5 years, then try negotiation to delete clause or cap service charges.

If not, Take Care! Proper survey essential to detect possible liabilities.

Landlord reserves right to charge VAT?

If it is a short lease and you are not VAT registered...

Get landlord to agree not to during your term.

Saddled with on-going liabilities e.g. for later tenants?

Problem if no break clause. Negotiate away if possible especially for short leases.

Rent review after less than 5 years?
Unusual unless lease is not a multiple of 5 (eg 12 years).

Upwards-only rent review?

Still common, but worth trying to negotiate anyway!

Checked assumptions for calculating market rent at review?

Take Care! Lease can contain wording which will lead to sudden big increases.

'Break clause' to allow you to surrender lease early?

Get one if you can. Make sure it is exercisable after a certain date, not only on that date - and after you know any reviewed rent.

Know level of business rates?

Don't rely on unverified statements from landlords.

Do get valuer's advice.

Being charged a premium?

Rare these days unless a very unusual retail site. valuation essential to assess reasonableness.

Rent-free period offered?

Reflects state of market, but should be seen in context of the lease - the landlords need to make money too.

Planning to improve your premises?

If adding genuine value to the asset, negotiate offset eg. a rent-free period.

Otherwise, make sure works are not included in rent review valuations.

Have you checked planning permission for intended use?

Take Care! This is your responsibility. You have no claim against the landlords if you discover consent is required after moving in.

Taking on an assigned lease?

Take Care! You may be taking on all liabilities for repairs etc, no just those from when you move in.

Also, the landlord must give consent, and will want to vet your financial status.

Offered right of alienation?

Negotiate. It gives you the right to sub-let if you wish, now or later.

Copyright The Law Society and Vickers & Co.

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N.B. for information only - this guide does not replace the advice of a solicitor

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