Negotiating a New Business Lease

Following the recession an increasing number of leases are being granted to new business start-ups entering the marketplace or existing businesses looking for more space as they expand. Following the recession leases in the commercial property market are typically granted for shorter periods.

The Landlord typically wants to dispose of the premises so that he has no ongoing financial commitment towards the repair maintenance or insurance.  He will offer a full repairing lease or an internal repairing lease with full service charge contributions.

The primary objective of a Tenant is to rent the business space for a known rent, with the least additional cost as possible. A full repairing lease or one where the tenancy is subject to a service charge adds additional unknown costs.

If the tenant is occupying the premises for a long period of time or is undertaking fitting-out works then the tenant may be happy with this arrangement as the Tenant benefits from a lengthy period of occupation allowing time for the additional maintenance costs to be written off.

There is usually little difficulty taking on premises and being responsible for the internal non-structural parts as that is a readily identifiable and manageable expense. The real issue is how to draw a balance between the landlord who wants the tenant to be responsible for all the costs associated with the building and the tenant who will only be occupying for a shorter period, typically 5 to 10 years. The tenant really does not want to be caught with expensive repairs.

The tenant really needs good advice on how to minimise its exposure to such expense in the circumstances and to put in place terms which will limit the tenant’s responsibilities or cap the expenditure.

Time spent at the outset negotiating lease terms can be advantageous in avoiding difficulties and expensive repairs at a later date and could pay dividends later on.

Dibbens Solicitors can provide appropriate advice the Tenant so please contact our property team at our Wimborne office on (01202) 882456.