Leasing of Commercial Property

How does leasing of commercial property work?

The main terms of the lease must be agreed upon between the parties to enable an appropriate lease to be drawn up. The parties must decide whether a Rent Deposit will be paid (usually one to three months’ rent by way of deposit) to be held by the person giving the lease and returnable after the lease provided that the terms and conditions of the lease have been abided by. If the granting of a lease also includes the sale of a business at the property to be leased, then the provisions in buying/selling commercial properties will also apply.

What documents are required?

It is usual for the landlord to require that the tenant be responsible for their solicitor’s fees (their solicitor’s costs and disbursements for preparing the lease and other incidental responsibilities). The landlord will often require Bank and Trade References (a letter from your bank giving their opinion on whether you are in a financially suitable position to take on the lease and references from Suppliers that you have previously dealt with, advising on your reliability).

On instructing a solicitor concerning the preparation of a lease, it is typical for the parties to the lease to have agreed to the term of the lease (how long the lease will last), the commencement rent (the initial amount of rent to be paid) and how the rent is to be paid (i.e. By way of standing order or direct debit), the rent review dates (at what stages in the lease the rent will be reviewed, i.e. every 3 or 5 years), whether there will be an option to renew (i.e. whether at the end of the lease there will be a right for the tenant to enter into a new lease on the property), an option to buy (should the landlord decide to sell the property and usually at full market value) and whether there will be a break clause, giving (usually the tenant but on occasion the landlord) the opportunity to give up the lease after a certain period of time (a given number of years and generally requiring between one and three months’ notice of intention).

How long can I lease a commercial property?

All leases of more than seven years must be registered at HM Land Registry. Please see buying a property for details of registration and the completion of an SDLT form. If you are buying, selling, or leasing a commercial property and/or business, don’t hesitate to contact us to advise you explicitly concerning your needs and requirements.

Leon Kaye Solicitors are fully accredited members of The Law Society’s Quality Conveyancing Scheme. For advice on commercial property, please email: info@leonkaye.co.uk or telephone: Chelsea Office: 0207 228 2020 or Knightsbridge Office: 0207 095 0930.