Don't get caught out!

Chown Commercial

1st July 2018

Starting & Staying In Business

Chown Commercial

The trend towards more flexible leases means tenants experiencing more regular renewals and often three-yearly rent reviews. Even if you are already established, up to one in three tenants reading this will move, renew or review their rent this year. Stephen Chown, of Chown Commercial offers some tips to tenants, especially new ones, considering taking on leases.


AGREEING the rent you'll pay and the length of lease is a good start, but always agree all terms before instructing solicitors - otherwise you will add extra expense to your already over stretched budget. A document called heads of terms should list precisely what you will be expected to do and pay for: it may sound daunting, but it will always be subject to contract (ie not yet binding on the parties) and will give you the chance to see all the terms on one sheet, rather than spread between several letters or emails. If you are not 100 per cent sure about everything - both at the beginning and end of the lease - take some advice.

There are a number of fundamental points to agree which are just as important as the rent: First: is the property in tip top condition? If so, take a full repairing lease, keep up with the house-keeping throughout the lease and all will be well. If it's looking tired, consider a schedule of condition. Camera-phones make a photographic schedule easy to produce nowadays and for a few hundred pounds a surveyor will give you peace of mind that you won't pay for someone else's repairs at the end of your lease.

A common myth is for tenants to assume that 'it was like that when I took it on - so it's okay'. If the defect was not documented in a schedule of condition then it will probably fall to the tenant to make good before handing the property back at the end of the lease. This is especially common where a tenant takes an assignment and occupies for the last two or three years of an existing lease. You may find yourself responsible for taking down someone else's partitions and making good if the premises were clear open plan at the start of the lease. Before signing up it is important to know exactly what will be expected of you in two, three or five years' time. This is information that a surveyor will offer you.

Commercial leases can often be more than 50 pages long and the short ones may have pitfalls created by what is left out. Even before you sign up you may be expected to agree to pay the landlords solicitors fees. If this is agreed between the two parties then place a cheque with your solicitor as soon as possible as this is the single most common reason for early hold-ups. Nothing will happen until the cheque arrives and it is the quickest way to wind up your new landlord! The next most common way is to be slow with references and to send a credit reference from someone to whom you actually pay cash on delivery.

Most business leases are governed by the Landlord and Tenant Act 1954 part II and this must be adhered to closely. When you come towards the end of a business lease each party gives each other notice before you move out or renew. Then there are expensive issues such as dilapidations for the parties to consider: advice at the end of a lease is as important as at the beginning.

This leads on to rent reviews which are less rigidly governed by time limits, but which can nevertheless catch out the unwary tenant. Reviews are best carried out just before the stated date as the evidence upon which they rely is fresh and up to date. If you leave a review unsettled you may well accrue interest and will certainly have to pay the increase over the delayed period in one lump. The exact wording of the lease will also affect the outcome so again professional advice may save a company unnecessary cost.

Stephen Chown is a qualified Chartered Surveyor and has 30 years of professional experience in commercial property advice. Before committing your company to several years of increased costs a consultation with a Chartered Surveyor is a wise move. Knowing what to budget for and knowing it is at the right price will help the profitability of your business as well as your peace of mind.

Chown Commercial can be contacted on 01604 604050 or via

Chown Commercial