We often find clients have agreed in principle the terms of a new lease without considering all the implications - sometimes to their disadvantage! A short discussion with us beforehand may save you time and money. You should consider the following:-

This is the length of time that the lease is to run (at least initially). It can be as short or as long as the parties agree but except in special circumstances most business leases are for at least three years.

The amount of rent will depend on many factors - the length of the term, the repairing obligations, the market conditions (who else might be interested in renting the property?) and the profit the Tenants anticipate they will be able to make. A reputable local surveyor will give an opinion on a fair rent but the more unusual the property and the more unusual the terms of the lease the more difficult this will be.

The Landlord will generally want the Tenant to repair the property or, if the Landlord is to be responsible he will want to recover the cost from the Tenant. A Tenant of a short term Lease should try and avoid to being responsible for the main structure of the property. If the roof needs repair the Tenant will have to do it but the Landlord will gain the long term benefit. If the property is in poor condition before the start of a Lease then standard repairing obligations will require the Tenant to put the property into good repair - something many Tenants fail to appreciate. The Lease can be modified to avoid this.

What does the Tenant want to use the property for? Will the Landlord allow the Tenant to change the use at a later date? On the face of it the Tenant is better off being able to use the property for any purpose but beware, this can have an impact on the level of rent.

In medium/long term leases there is usually a rent review, typically every three to five years. Almost invariably the rent is reviewable upwards only. If the Landlord and Tenant cannot agree a new rent then typically the Lease provides that the rent is referred to an independent surveyor for assessment.

This allows the Tenant to serve notice bringing the Lease to an early end. A break clause can be very useful to a Tenant starting out in business and unsure of the prospects of success.

Some Landlords will want to charge VAT on the rent. If the Tenant is VAT registered then this is recoverable but can cause a cash flow problem. If the Tenant's business is not going to be VAT registered it effectively puts the rent up by 17.5%.

This is a complex area of law affecting all business leases. In the absence of a special notice (usually served by the Landlord, but sometimes by the Tenant), a business lease continues after its apparent expiry date - indefinitely! Even if the notice is served , the Tenant has the right to apply to the Court for a new lease - which the Landlord can only oppose in limited circumstances. Landlords who need vacant possession at the end of the Lease must ensure that the Lease is "contracted out" of the 1954 Act protection for which a Court Order has to be obtained before the Lease is executed.

Tenants should beware of agreeing to pay the Landlord's legal fees in drawing up the new Lease. The Tenant will have no direct control over those fees. If the Landlord is insistent then at the very least, put a limit on the amount the Tenant will have to contribute.