Overview

Signing a commercial lease is one of the biggest commitments a business will make, but it’s often rushed through under pressure to secure the right premises. This blog provides tenants with a practical, step-by-step checklist before signing, highlighting responsibilities, financial risks, and essential documents. With careful preparation and expert advice, tenants can avoid costly surprises and ensure their lease supports their long-term business goals.

Commercial Leases – Your Checklist

The right property can make or break a business. A well-located office, warehouse or retail space provides visibility, credibility and room to grow. But behind every attractive premise is a legally binding lease and it’s this document that shapes the financial and operational reality for tenants.

Commercial leases in the UK are notoriously complex. They are written to protect the landlord’s assets, not the tenant’s interests. Without proper checks, businesses risk signing up to hidden costs, restrictive  covenants and unexpected liabilities.

This is why every tenant needs a clear, practical checklist before committing to a lease. Let’s walk through the key steps.

  1. Understand the Basics of the Lease

Before diving into the fine print, tenants must get clarity on the fundamentals:

  • Lease length: Longer terms provide security but reduce flexibility. Shorter terms with renewal options might suit growing businesses.
  • Break clauses: These allow you to exit the lease early under certain conditions. Without one, you may be tied in longer than expected.
  • The Demise: What is actually being leased to you. Is it the entire building? A single floor? Are there any exclusions? Clarity on the extent of the ‘Premises’ is crucial in understanding what you are responsible for.
  • Rent and reviews: Understand not just the starting rent, but how and when it will increase (e.g. every 3–5 years, upwards only).
  • Service charges: Many leases require tenants to contribute to building-wide maintenance, which can add significantly to costs.
  • Insurance responsibilities: Confirm whether you are expected to reimburse the landlord for insurance premiums.

This sets the stage for understanding your financial and legal obligations.

  1. Review Repair and Maintenance Obligations

Repair clauses are among the most important, and most expensive, parts of a commercial lease.

  • Full repairing lease (FRI): You may be responsible for keeping the entire building in repair, even if you only occupy part of it.
  • Internal repairing lease: Obligations are limited to the interior of the property.

Without careful negotiation, tenants can inherit liabilities for pre-existing defects.

The Role of a Schedule of Condition

This is a photographic and written record of the property’s state and arrangement at lease commencement. Without it, you could be held responsible for repairing issues that existed before you moved in or potentially liable for reinstatement of alterations that you didn’t undertake. A Schedule of Condition limits liability by showing exactly what you received.

  1. Check Restrictions and Tenant Responsibilities

Beyond repair, tenants should be clear on how they can (and cannot) use the property. Key areas include:

  • Alterations and fit-outs: Many leases require landlord consent for even minor works.
  • Subletting or assignment: If you need to relocate or restructure, you may wish to sublet or transfer the lease. Restrictions can limit your flexibility.

Permitted use clauses: These define what type of business activity is allowed in the property. Breaching them risks forfeiture of the lease.

  1. Assess Financial Commitments Beyond Rent

The rent figure is only the beginning. Other costs can catch tenants off guard:

  • Business rates: These are a major overhead and vary by property type and location.
  • VAT: Some landlords opt to charge VAT on rent – confirm this upfront.
  • Hidden costs: Insurance premiums, service charge balancing payments and compliance works (e.g. fire alarms, asbestos removal) can all fall on the tenant.

Careful budgeting is essential to ensure the lease remains affordable long-term.

5. Carry Out Property Due Diligence

Understanding the building itself is just as important as reviewing the paperwork.

  • Pre-lease surveys: Commission a Building Survey or Planned Preventative Maintenance (PPM) Survey. These identify structural issues, compliance risks and likely costs.
  • Regulatory compliance: Check fire safety, accessibility and health & safety standards.
  • Energy Performance Certificate (EPC): Landlords cannot let properties with an EPC below “E” and regulations are tightening. Poor energy performance can mean higher bills and future upgrade costs.

Due diligence ensures you know exactly what you’re taking on and can strengthen your negotiating position with Landlord’s in terms of discussions around; rectifying known issues, exclusion of liabilities, increasing rent free periods or even getting capital contributions.

  1. Protect Yourself with Documentation

Two key documents protect tenants from unfair liabilities:

  • Schedule of Condition: As noted, this establishes a baseline.
  • Commercial Building Survey: Independent advice from a building surveyor around the condition of the property, compliance with legislation and occupational considerations through your lease term. Highlighting risks and strengthen negotiations.

Equally important is legal advice. A solicitor experienced in commercial property will spot clauses that could tie your business in knots, from onerous rent review terms to hidden reinstatement obligations.

  1. Plan Ahead for Exit

It may feel strange to think about leaving before you’ve even signed, but exit planning is crucial.

  • Dilapidations liabilities: At lease end, tenants are often served with a claim for repairs and reinstatement.
  • Reinstatement obligations: Any alterations made (even if they improved the property) may need to be reversed.

 

Express Covenants: Obligations in the lease that expressly state the Tenant must do something. Simply put they must be carried out even if in good condition. Typically found in re-decoration clauses.

  • Budgeting: Planning for these costs avoids a nasty shock when you vacate.

Tenants who plan ahead, ideally from day one, are best placed to minimise disputes and costs at the end of their lease.

  1. Final Tips Before You Sign
  • Negotiate: Many lease terms are negotiable. Don’t assume you must accept the first draft.
  • Take your time: Landlords may push for a quick signature but rushing increases risk.
  • Use professionals: Instruct surveyors and solicitors. Their fees are minimal compared to the potential savings in reduced liabilities.

Get Peace of Mind

A commercial lease isn’t just a legal formality. It’s a long-term business commitment with major financial implications. By following this checklist, tenants can protect themselves from hidden risks, budget accurately and secure terms that genuinely support their operations.

At Bressummer ARK, we help tenants at every stage of the leasing journey, from pre-lease surveys to negotiating dilapidations at exit. Our role is to ensure you’re fully informed, fully protected and free to focus on growing your business.

Before you sign your next lease, let Bressummer ARK give you the clarity and confidence you need. Contact us today for expert advice on surveys, schedules of condition and tenant responsibilities.

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