5 Tips of things to look for in a Commercial Property Lease

Are you signing up or thinking of signing a commercial lease? Here are a few key provisions to look out for.

Rent

The biggest outlay when renting a property is rent so it’s vital to understand the potential monetary obligations. You need to know how much, how it is calculated and whether it will automatically increase (often referred to as rent reviews or rent adjustments).

Ratchet clauses

A ratchet clause is a clause which attempts to prevent any decreases in the rent.

Ensure that your lease review provisions are clear and that there is no attempt to prevent a legitimate decrease in the rent.

Outgoings (operating expenses)

Sometimes a tenant is required to contribute towards the outgoings (or operating expenses) of the leased premises. These operating expenses can include things like rates, taxes, cleaning costs for the building, insurances and the like.

Other Expenses

The Lease may place other financial or related obligations on the tenant eg fixtures, fittings, equipment or services, etc

Lease term and options

The term of the lease is the amount of time you can rent the shop for under the Lease, eg 5 years. At the end of the initial term of the Lease, there may be an option for the tenant to continue on under the Lease for a further term or terms. Make sure you check the way rent is calculated for the option period as sometimes it can vary.

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