A commercial lease can make or break your new business. Many first-time business owners sign leases without spotting costly problems hidden in complex legal terms. Here are five lease traps to watch for before you sign.
In This Article
Personal Guarantees in Your Lease
Personal guarantees mean you’re personally responsible for rent payments even if your business fails. Many landlords require these guarantees from new businesses without trading history. Try to limit the guarantee period or cap the amount you’re liable for.
Hidden Costs Beyond Base Rent
Base rent is just the start. Your lease might include maintenance fees, building insurance, property taxes, and utility charges. Ask for a complete breakdown of all costs and get estimates in writing. Some landlords pass through cost increases to tenants without warning.
Rigid Lease Terms
Long fixed-term leases can restrict your business growth. If your business needs change, you might be stuck paying for unsuitable space. Look for flexibility like break clauses or options to sublet. Check if you can make alterations or changes to the space as your business grows.
Repair Obligations
Many leases make tenants responsible for expensive structural repairs. Check exactly what you must fix and maintain. Get a building survey before signing to document existing issues. Try to limit your repair obligations to non-structural elements.
Automatic Rent Increases
Watch for rent review clauses that allow automatic increases. Some leases tie increases to inflation or set fixed percentage jumps. Calculate how these increases affect your long-term costs. Try to negotiate caps on yearly increases or market-based reviews instead.
Before signing any commercial lease, get legal advice. A lawyer experienced in commercial property can spot these traps and help negotiate better terms. The money spent on legal review often saves much more in avoiding lease problems.
Remember: your lease terms affect your business plan and cash flow for years. Take time to understand every clause and negotiate terms that protect your new business.
Your Next Step
Contact us today at 0121 268 3208 or via email at info@onyxsolicitors.com for a FREE consultation. Let us help you achieve the peace of mind that comes with having expert legal support on your side.
