Key issues in commercial leases

Starting up a new business or expanding is an important time for everyone involved. It is integral to most businesses to have commercial premises from which to operate. However, property issues are often not given the time and consideration they require. There are expensive traps that can be avoided if commercial property advice is sought at an early stage.

• Take your own surveyor's advice as to the appropriate level of rent.
• Always get a survey carried out however the premises appear - a lick of paint can be deceptive. There can be expensive hidden dangers with items such as roofs. If the premises are not in good repair, request that a photographic schedule of condition is attached to the lease so that you are not under any obligation to put the premises in any better state than as shown by the photographs. Alternatively, get your surveyor to cost the works and request a rent-free period to allow you to carry out the works.
• You do not want to take on all the financial obligations in a lease for longer than you can support them. If the landlord insists on a long term then request an unconditional break, but be aware that the landlord may increase the rent for such a benefit. Ensure that the lease can be freely assigned or underlet. This means that you can dispose of the premises if you no longer need them.
• If the premises are part of a building or on an estate and the landlord charges a service charge to cover communal items, ensure you know exactly what can be included in the service charge and that the landlord cannot increase these services at his discretion. Consider requesting a cap on the service charge level.
• Ensure that the premises comply with all current legislation including the Disability Discrimination Act, the Asbestos Regulations and current environmental legislation. If not, request that the landlord is responsible for these items, especially if you are only taking a short term lease. These works will only improve the capital value of the landlord's asset.

Jo Thirsk

Jo Thirsk has recently joined Raworths as a commercial property solicitor.