However, as there is a myriad of legal clauses and terminology involved spanning the various types of commercial leases in the UK, please contact one of our experienced business lease solicitors here at Hook and Partners who will guide you through the process.
What Does a Commercial Business Lease Include?
Depending on whether you are a landlord or a tenant, there will be various obligations that need to be met, as both have a duty to ensure certain areas of the premises are maintained and are a safe place for people to work. With many commercial properties let on what is called a Fully Repairing and Insuring (FRI) Lease, the responsibility will lie solely with the tenant but if the building is shared with other tenants, then the landlord will be responsible for managing the communal areas and the building’s structure.
Types of Commercial Leases UK
There are two main types of commercial business leases. These can be categorised as Gross Lease or Net Lease and split into the categories below.
This lease is based on a base rent plus a percentage of monthly sales.
Net lease (or single net lease)
In addition to the base rent, the tenant will also pay a proportion of relevant taxes, insurance or maintenance i.e. a single additional element added to the base rent.
Double net lease
In addition to the base rent, tenant will also pay a proportion of taxes and insurance. i.e. two additional elements added to the base rent
Triple net lease
In addition to the base rent, tenant will also pay a proportion of taxes and insurance and maintenance.
i.e. three additional elements added to the base rent.
Fully serviced lease
This lease is based on all costs being included within the rent, although rents are usually significantly higher to accommodate this.
Landlord or Tenant
As a landlord you have to ensure your commercial premises are both fit for purpose and the intended use of the premises meets with local planning regulations. You should also ensure the rental value you wish to impose is set in line with any local demand and other property rates.
As a tenant it is important to agree upfront with the landlord how much the annual rent will be and when you will have to pay this and with most commercial business leases granted for 5 years it may also be worth requesting that a ‘break clause’ is included. In case you need to expand further within that timeframe and move premises again this will allow the contract to cease. Finally, remember to ask whether VAT will be charged on top of the rent. With VAT set at 20%, it is important to note this will increase your costs significantly if you are not VAT registered.
For any further advice on business premises leases or business premises leases in Essex contact Hook and partners today for professional advice.