Nearly all businesses require premises from which to operate, whether they are in the retail, office, leisure, manufacturing sectors or say warehousing.

A commercial lease is a binding contract made between the business owner and the landlord of the property. Unlike buying land or property outright, the lease entitles the tenant to use the property for its business, or commercial activities for a specified period. In return the tenant pays to the landlord a rent for that finite period of use.

Entering into a commercial lease, can be a significant financial commitment and to the unwary it can be complex. 
Our experienced Commercial Property Solicitors can handle everything from straightforward transactions to more complex transactions, ensuring each step is managed smoothly. With decades of combined expertise, we can provide the support and commercially focused guidance you need.

If you’d like more specialist advice suited to your circumstances, you can speak to one of our solicitors and specialist lawyers in Ashford, Cranbrook and Hythe. Please be aware that this blog is for informative purposes only and should not be taken as legal advice. 

Who are the Parties?
The ‘parties to a lease’ are called the lessor (the landlord), and the lessee (the tenant). In some instances you may also have a guarantor or surety, who agrees to repay losses arising to the landlord if the tenant fails to pay the rent or even breaches their agreement in another fashion.

What terms can I expect to see in a Commercial Lease?
The key terms will include:

• The Lease term or duration: This clause specifies how long the lease will last, whether it's a fixed term or includes options for renewal.
•  Automatic renewal: The lease should specify if it is an automatic renewal, termination or extension. You should also be aware of security of tenure which is a statutory right to an automatic renewal of a commercial lease at the end of the term (subject to some exceptions), granted under the Landlord and Tenant Act 1954 (LTA 1954). 
• Rent and any Rent Adjustments: Specifying the amount of rent to be paid, including in many cases, provisions for rent increases, either through fixed increases, percentage increases, or tied to indices like the Consumer Price Index (CPI).
• Additional Rent: Often includes service charges for common area maintenance, property taxes, and insurance, which can be passed on to the tenant.
• Permitted Use: Defines what activities the tenant is allowed to conduct in the leased space. This is crucial for ensuring that the tenant's business operations align with any Planning Regulations and the landlord's property management strategy.
• Maintenance and Repairs: Clearly outlines who is responsible for what in terms of maintenance and repairs. 
• Alterations: Details the conditions under which tenants can alter the space, including any structural changes or aesthetic modifications.
• Security Deposit and Guarantees: This specifies any amount to be held by the landlord as security against breaches of the lease by the tenant.
• Personal or Corporate Guarantee: Often required for new or small businesses to assure the landlord of rent payment, where an individual or parent company guarantees the lease obligations. 
• Insurance and Liability:  This specifies the types and amounts of insurance coverage required from both parties. Tenants typically need liability insurance, while landlords might require property insurance.
• Indemnities: Provisions where each party agrees to bear the cost of any legal claims from the third parties related to their actions.
• Default and Remedies: These define what constitutes a breach of the lease such as non-payment of rent, or the breach of ‘use’ clauses, and the steps the landlord can take upon default, such as seeking to evict and/or claiming damages. 
• Rectification Periods: Timeframes are given to a tenant to remedy any breach before further action is taken.
• Assignment and Subletting: Landlords often require approval before a tenant can assign the lease to another party, or sublet the space, protecting them from undesirable business types or credit risks.
• Termination Clauses: These detail any conditions under which either party can terminate the lease early, potentially involving penalties or specific notice periods.
• Break Clauses: Allows the tenant to end the lease at certain points without penalty, often after a number of years.
• Dispute Resolution: Many leases specify how disputes should be resolved, whether through mediation, arbitration, or legal action, which can help in managing conflicts without immediate recourse to courts.

Conclusions
Commercial leases are complex agreements that require careful negotiation and understanding. Each clause serves to manage risk, define responsibilities, and protect the interests of both landlord and tenant. For businesses, understanding these clauses is vital not only for financial planning but also for operational flexibility and legal compliance. Given the potential implications, it is advisable to involve legal assistance when negotiating or agreeing to a commercial lease to ensure your interests are adequately represented and protected.

If you are a Landlord or a tenant please take advantage of the reassuring, professional advice offered by our  Commercial Property Solicitors and Specialist Lawyers  in Ashford, Cranbrook and Hythe. Alternatively, you can "GET IN TOUCH" and a member of our team will get back to you promptly.