Top 5 Mistakes to Avoid When Leasing Commercial Property

There are significant differences from taking on a commercial lease to that as a residential tenant. Whilst technically they might seem the same, there are different rights and responsibilities attributed to the tenant of a commercial property. To help you avoid unnecessary errors, here are the top 5 mistakes tenants make when leasing a commercial property for the first time.

1.    Additional expenditure

There are usually more financial demands with a commercial lease. Tenants often need to have a comprehensive insurance policy in place as well as covering service charges and property management fees. Ask the landlord up front for a complete list of all the charges, so that you have a clear view of your financial commitments upfront.

2.    Be aware of a rent review

Commercial landlords, the same as residential landlords, are likely to review the rent periodically. However, many tenants assume that rent will remain the same, particularly on a long commercial lease. You can expect a rent review around every three to five years and any change in the rent should usually be based on what that rent would be worth on the open market.

3.    Negotiate a Break Clause

Consider the usefulness of a break clause when entering into a long-term lease agreement, especially if your business is a new start-up. Give yourself the option of being able to terminate the commercial lease early, if your business is not going as well as you would like.

4.    Don’t hesitate to take professional advice

Both landlords and tenants are advised to seek professional advice before entering into a new commercial lease. This will ensure that all parties completely understand the documents they are signing and that there is nothing wrong with the overall documentation.  Hence protecting them against future surprises.

5.    Treat your landlord as one of your suppliers

Think of your landlord as one of your suppliers and not as the enemy. Cordial relations between a landlord and tenant can make all the difference to your overall experience. Common courtesies, such as keeping the landlord informed of events, fulfilling proper notice periods in the lease, paying rent on time and raising any issues in a non-confrontational and reasonable manner are all key to making sure that the relationship continues to work on an ongoing basis – for both parties. Changes to the rent, insurance, building improvements or a planning application may all arise over the course of a tenancy and if these can be dealt with without conflict it makes everyone’s life easier.

Commercial tenancies are often essential in business and by avoiding the most obvious errors as listed above, you are more likely to have a positive leasing experience.

If you require any further advice on entering into a commercial lease agreement, Forrester Sylvester Mackett offers a comprehensive range of services for businesses of all sizes and sectors. For a free legal health check please contact Nick Guinness, Company Commercial Partner at our offices in Trowbridge on: 01225 755621.