When you sign a commercial lease agreement, you’re agreeing to rules that set out your rights, responsibilities, costs, and how long you can stay in the property. These terms can affect your cashflow and business stability, so it helps to know what each one means before you commit.
In This Article
1. Lease Length (The Term)
The lease length sets out how long you can use the property. Most small businesses see terms of 3–5 years, while larger units run for 10 years or more.
You should check:
- If there’s a right to renew
- Any break clause
- What happens when the term ends
2. Rent and Rent Reviews
Your lease will set your rent and how it changes over time. Rent reviews usually happen every few years and can increase your costs quickly.
Common types:
- Fixed increases
- Open-market reviews
- Inflation-linked reviews
Make sure you know the dates and methods used for reviews.
3. Service Charges
Service charges cover the cost of shared areas and building upkeep. These fees can vary, so pay attention to how they’re calculated.
They often include:
- Cleaning
- Security
- Lighting and heating in shared areas
- Car park maintenance
Ask if there’s a cap to avoid unexpected increases.
4. Repairs and Maintenance (FRI Responsibilities)
Most commercial leases are full repairing and insuring (FRI). This means you take on many repair costs, even for issues that existed before you moved in.
Typical obligations include:
- Internal repairs
- Contributions to external repairs
- Paying towards the building’s insurance
A schedule of conditions can protect you from paying for old damage.
5. Break Clause
A break clause gives you the option to leave early. It’s useful if your business changes.
Look for:
- The earliest date you can break
- How much notice you must give
- Conditions you must meet (e.g., all rent paid, property tidy)
If you don’t meet the conditions exactly, the break may not work.
6. Permitted Use
This term explains what type of business you’re allowed to run from the property.
Shops, offices, cafés, salons and industrial units all fall under different categories.
If you plan to change the use later, you may need landlord consent.
7. Alterations
Leases often restrict what changes you can make to the property.
You’ll usually need permission for:
- Structural work
- New signage
- Changing the layout
At the end of the lease, you may have to undo these changes.
8. Assignment and Subletting
Assignment lets you transfer the lease to someone else. Subletting lets you rent part or all of the property to another business.
Check:
- If assignment is allowed
- If subletting is allowed
- Any financial or personal guarantees required
These rules affect how easily you can move or restructure your business.
9. Insurance
The landlord insures the building and you pay your share of the premium. This is separate from your own business insurance.
Check:
- What the landlord’s policy covers
- What’s excluded
- What extra insurance you need for stock and equipment
10. End-of-Lease Costs (Dilapidations)
When the lease ends, you may need to return the property to its original state.
This can include:
- Repairs
- Repainting
- Removing alterations
- Fixing general wear and tear
These costs can be high if the lease wording is strict.
Summary
A commercial lease agreement covers:
- How long you can stay
- How much you’ll pay (rent, reviews, service charges)
- What you must repair
- When you can leave
- What changes you can make
- What happens at the end
Taking time to review these terms can save your business money, stress, and long-term problems.
Need Help Reviewing Your Commercial Lease?
If you want a solicitor to check your lease before you sign, you can speak to Onyx Solicitors for clear advice and fixed-fee options.
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.
