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Commercial Leases – The Devil is in the Detail


With business confidence growing in West Berkshire, Malcolm Poynter, a commercial property specialist with law firm, Charles Lucas & Marshall, is witnessing a noticeable increase in instructions on new leases. These are ranging from start-ups taking their first premises through to establishing businesses relocating and expanding.

Malcolm Poynter

Malcolm Poynter – Managing Partner

The tenant, under a commercial lease, usually takes on obligations which are not always that obvious to people not used to dealing with commercial leases on a regular basis.

Tenants often negotiate terms with the landlord’s agents but are not themselves represented. Since the landlord agent acts for the landlord, he obviously tries to get the best deal he can for his client. Tenants can often get a better deal if they are themselves represented by an experienced commercial agent. The agent can advise you on the amount of rent you should be paying. He can advise on the market and your negotiating strength. The solicitor will advise you on the terms of the lease and what they actually mean.

During the course of negotiations Heads of Terms will be agreed. These tend to be non-binding but are the basis upon which the landlord’s solicitor will draft the necessary documentation.

The tenant should be in contact with his solicitor to discuss the main terms as matters progress so that there are no unpleasant surprises when the draft documentation arrives. Without this, tenants often find that they had not fully appreciated what they had agreed until we explain the provisions of the resulting draft lease to them.

Once Heads of Terms have been agreed and issued it is far more difficult to reduce the impact of the more onerous provisos when negotiating the draft lease.

Understanding risks and potential obligations is crucial to planning your business and commercial leases can often include significant risks and obligations for the tenant. For example, it is often thought that solicitors’ advice is less important for short term leases at a low rent. However, this may not be the case. If your annual rental is a few thousand pounds but you then, unexpectedly, discover you are responsible for the cost of repairing the roof the actual cost of your occupation has increased significantly.

If you are to pay a service charge, then what can the landlord charge back to you? Often he can charge you the full amount expended in repairing the structure of the building and, in some cases, even the cost of improvements.

You may well be able to remove or limit your liability but ensuring you understand the Heads of Terms agreed could be crucial.

If you understand your potential liabilities you can plan accordingly. You may see a property you think is ideal for your business, but do the sums stack up? Does it come with unacceptable risks? Professional advice can help you answer these questions.

Further details please contact Malcolm Poynter on 01635 521212 or malcolm.poynter@clmlaw.co.uk

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Malcolm Poynter
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Malcolm Poynter

April 25th, 2014 at 5:27 pm