Commercial Leases: A Plain-English Landlord Guide
Written by Scott Jones, founder of CommercialPropertyKiln · Last updated
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A commercial lease is the contract that sets out what your tenant can do, what they pay, who repairs the building and how the arrangement ends. These are the parts that matter most to a landlord.
The key terms
- Term: the length of the lease, and whether it has the protection of the 1954 Act (see lease renewal).
- Rent and reviews: the starting rent and how it changes, usually at a rent review, or a turnover rent in retail.
- Repairs: whether the tenant is on full repairing terms. See FRI vs IRI.
- Break clause: any right to end the lease early. See break clauses.
- Alienation: whether the tenant can assign or sublet. See assignment and subletting.
- Use: what the premises can be used for.
- Occupation type: a full lease, or a licence or tenancy at will for flexible, short-term arrangements.
Security of tenure
Most business tenancies carry security of tenure under the Landlord and Tenant Act 1954, meaning the tenant has a right to renew unless you oppose it on statutory grounds. This can be excluded by contracting out before the lease starts.
Getting the structure right
The commercial terms are set in the heads of terms before lawyers draft the lease. A commercial lease is a significant legal document, so use a solicitor to draft and review it. This guidance explains the concepts; it is not a substitute for advice on your specific lease.
Does my commercial tenant have security of tenure?
Most business tenancies carry security of tenure under the 1954 Act, giving a right to renew unless you oppose on statutory grounds. It can be excluded by contracting out before the lease starts.
Who drafts a commercial lease?
A commercial lease is a significant legal document that a solicitor should draft and review. The commercial terms are agreed first in the heads of terms.