02 Sep 2026

A commercial lease is a long-term legal and financial commitment, and the detail within it can significantly impact your business operations. Before signing, it’s essential to understand the key clauses and how they may affect you in practice.

Lease Term & Break Clauses

The lease term sets out your minimum commitment to carrying out and performing the leasehold obligations.fr While longer terms can provide security, if flexibility is required, this may be provided through a Tenantbreak clause. If the Landlord requires the flexibility of a Landlord and/or mutual break clause, you should be sure that this accords with your business plans else you may find yourself without a property from which you can operate your business from, far sooner than you anticipated.

In respect of a Tenant Break Clause, checkcarefully when the break can be exercised, how much notice is required, and whether strict conditions apply (such as being fully up to date with rent and compliance obligations). Even minor breaches can invalidate a break notice. You should ideally consult a solicitor before looking to exercise your break clause, as if your right to break the Lease is a “one off” break, and the form of notice does not accord with the provisions of the Lease, you are likely to have lost your right to break the lease and be committed to the full length of the lease term.

Rent & Rent Reviews

Initial rent is only part of the overall cost. Most longer leases include rent reviews every 3-5 years, often based on open market value or indexation (such as CPI or RPI).

It’s important to understand how increases are calculated and whether there is any cap or collar in place, as this will affect long-term budgeting. Complex rent review clauses should  generally be reviewed by a specialist surveyor.

Repairing Obligations

Many commercial leases are full repairing and insuring (FRI), placing responsibility on the tenant for repairs and maintenance, sometimes (especially if you are taking a lease of a whole building) including structural elements. You should appreciate that this could lead to a significant financial impact, should you (for example)be called on to repair a roof.

Always inspect the premises and consider (especially in shorter term leases) agreeing a schedule of condition to limit liability for existing defects. Without this, you could be required to return the property in a better condition than when you took it on.

Service Charges

Service charges cover the cost of maintaining shared areas and services such as security, cleaning, and building management. These can vary significantly.

Review what is included, how costs are apportioned, and whether there are any caps or dispute mechanisms. Lack of clarity here can lead to unexpected increases. Even if the Heads of Terms for your Lease set out the level of the annual service charge – unless the Lease itself specifically provides for a cap on such service charge – you could be liable for more than the stated amount as per the Heads of Terms at the end of the Service Charge year- when the Landlord conduct  their reconciliation of service costs for the previous year.

Permitted Use

The lease will define how the property can be used. This may be narrowly drafted, restricting your ability to diversify or change business activity.

If your plans may evolve, it’s important to ensure the use class is flexible enough or can be varied with landlord consent and any required planning permission.

Assignment & Subletting (alienation)

These provisions govern whether you can transfer the lease or let whole or part of the premises to another party.

Restrictions are common, and landlord consent is usually required. However, overly restrictive clauses can limit your ability to sell the lease and/or the business which you operate from the property or reduce costs if circumstances change. It is important to consider the flexibility of the alienation provisions, especially if there are no break clauses in the Lease.

Alterations

Most businesses will need to adapt their premises. Leases typically permit internal non-structural changes with Landlord consent (unless the alterations are very minor). Structural Alterations are almost never permitted.

Depending on the extent of the proposed alterations, the Landlord may require you to enter into a Licence for Alterations, which will govern how the works are carried out and will cover matters such a time scale for starting/completing the works and what materials may be used. Tenants are generally always responsible for the Landlord’s legal/surveyor fees in respect of agreeing/entering into a Licence for Alterations.

It is prudent to discuss what alterations (if any) you will need to make to the premises with the Landlord – to get an agreement in principle, before committing to the Lease.

Check whether reinstatement is required at the end of the term, as this can create additional exit costs.

Insurance & Liability

In most cases, the landlord insures the building and recharges the cost to the tenant. However, tenants are often responsible for certain risks, including contents and business interruption.

Understanding what is covered – and what is not – is key to avoiding gaps in protection.

Contributions to insurance costs may be covered in the service charge or they could constitute a separate head of expense.

Contact our commercial property team today for expert legal advice before you sign anything.

A commercial lease is not just a rental agreement – it is a detailed legal framework that governs how you operate from a premises. Small clauses can have long-term financial and operational consequences.

Taking legal advice before committing can help ensure the lease aligns with your business needs and avoids costly surprises later on.

Contact us today.