Written by Callum Goddard
Taking on commercial premises is a big step for any business. Whether you are opening your first site, expanding your operations, or letting out a unit, the lease you sign can affect your costs, flexibility and day-to-day operations for years.
Across Hampshire, Sussex and the south coast, demand for commercial property remains strong, especially in places such as Emsworth, Chichester and Portsmouth. That creates opportunity, but it also makes it even more important to understand the legal terms before you commit.
A commercial lease is not just about rent. It can include wide-ranging responsibilities for repairs, insurance, service charges and what you must do when the lease ends. Reviewing those terms early can help you avoid expensive surprises later.
What to check before you sign a commercial lease?
Before signing a commercial lease, it is sensible to take independent legal advice so you fully understand your financial and legal commitments. Key points to check include:
1. Lease length
Commercial leases often last several years. That can give your business security, but it can also limit flexibility if your needs change.
2. Security of tenure
Security of tenure refers to the statutory protection that gives a tenant the right to remain in occupation when the initial contractual term ends and, in many cases, provides a right to renew the lease. Security of tenure is important for tenants because it provides business continuity. For landlords, the question of whether a lease provides security of tenure is important because it can affect their ability to recover possession, redevelop, sell, or re-let the property.
3. What you are actually leasing
This is known as the demise. If you lease a whole building, you are more likely to have a fully repairing and insuring lease (FRI). This usually means you take on full responsibility for repairs and maintenance. If you lease part of a building, the landlord will usually look after the structure and shared areas, then recover the cost through a service charge. For a lease of part of a building, the parties should consider what access rights are required and whether the tenant needs rights to do things outside of the building, such as to install or maintain equipment (for example, an air conditioning unit).
4. Use and planning
You need to make sure the property has the right planning permission for your business use. The lease may also restrict how you use the property. Additional rules may apply if the property is in a conservation area or is a listed building. The property must also have a satisfactory Energy Performance Certificate (EPC).
5. Alterations and fit-out
If you need to fit out the premises, install signage or make changes, check what the lease allows. Landlords often permit internal, non-structural changes only with prior consent. You may also need to take account of whether there would be any impact on the EPC or if Building Regulation approval is necessary.
6. Break clauses
A break clause allows the lease to end early in certain circumstances. Without one, you may be tied in for the full term.
7. Assignment and subletting
This is sometimes called alienation. It covers whether you can transfer the lease to someone else or sublet part or all of the property. This can be important if your business changes or you no longer need all the space.
8. Rent reviews
Many leases review rent every three to five years. Reviews are often based on open market rent or inflation measures such as RPI or CPI. It is important to understand how increases are calculated.
9. Repairs and maintenance
Some leases make the tenant responsible for costly repairs. A Schedule of Condition with photos can help limit that risk by recording the state of the property at the start of the lease.
10. Insurance
The landlord usually insures the building and reclaims the cost from the tenant. The lease should clearly say what happens if the property cannot be used because of insured or uninsured damage.
11. Service charge
If you rent part of a building or space on an estate, you may have to contribute to the upkeep of shared areas and structural parts. Make sure you understand what you are paying for, how often you pay, and whether you can inspect the service charge accounts.
12. End of lease obligations
This is often called yielding up. The lease should make clear what condition the property must be returned in. You may need to remove alterations, take out fittings, or even return the unit to shell condition.
Taking a proactive approach to protect your business
A commercial lease is more than a property agreement. It can shape the future of your business for years to come. Understanding the key terms early can help you avoid disputes, control costs and make better decisions.
Whether you are a business owner taking on new premises or a landlord letting commercial property, understanding the legal details of a lease early can make a real difference and help avoid costly problems later.
At Belcher Addison, we help landlords and businesses across Hampshire, Sussex and the south coast review, negotiate and manage commercial leases with confidence.
If you are thinking about leasing commercial property, or want to review an existing lease, contact our team for clear, practical advice.
