When renting premises for your business, the lease that you enter into with the owner of the property is the legal document that gives you the exclusive right to occupy premises as a tenant for a fixed term in exchange for the payment of rent. It also covers the conditions of your tenancy.
Terms that you need to check and which are usually contained in an agreement include:
Commercial lease period. This is usually between 3 and 5 years, but some can be as long as 25 years. Short leases are sometimes more difficult to obtain.
Notice period to terminate agreement, including break clauses. Break clauses allow you, or the landlord, to terminate the contract early, after a set length of time. For instance, you may be able to terminate a six-year lease after three years.
Value of the rent and review dates. Rent may be charged monthly or quarterly in advance, and will usually be liable for VAT. It will also be subject to periodic reviews.
Insurance obligations. It should be clear who is responsible for insuring the premises. If the landlord insures them, they may pass on this cost in service charges in addition to the rent.
Access rights. Do you have access to the premises 24 hours a day, 365 days of the year, if you need it?
Repairs and renewals. What are your responsibilities for maintenance and repairs to the premises?
Decorations and signs. You will need to seek the landlord's permission for any business signs you want to install at the premises. There may also be local restrictions and planning regulations.
Service charges for shared services provided by the landlord.
Subletting and assignment. Subletting involves leasing all or part of your premises to another tenant. Assignment involves a third party taking over the rental agreement. You will need to check with your landlord if this is allowed under the lease.
Security measures. The agreement will usually cover who is responsible for the security of the premises, and whether you can you add extra security measures such as CCTV cameras and physical barriers, if they are required.
The agreement, once signed, is a legally binding contract. Therefore you should ensure that you take advice from a solicitor prior to signing the document.
