Harper James advises UK businesses on commercial leases under the laws of England and Wales, including the commercial and operational consequences of taking new premises. A lease review should identify financial commitments, restrictions on the business and obligations that continue throughout the term or at exit.
Start by checking that the lease matches the agreed heads of terms. Confirm the parties, premises, plan, lease length, commencement date, rent, rent-free period, deposit, VAT treatment and any guarantor requirements. Check whether the lease includes rights to use parking, loading areas, storage, signage and shared facilities. The permitted use must cover the business’s current activities and planned changes. Restrictions on opening hours, customer access, deliveries, noise or alterations can affect whether the premises are suitable.
Rent is only one part of the occupation cost. Examine the service charge budget, insurance rent, business rates, utilities and any estate management costs. The repairing obligation deserves particular attention. A full repairing and insuring lease can require the tenant to maintain the premises and pay for repairs, including work needed to remedy pre-existing defects if the lease does not limit that responsibility. Review the schedule of condition, repair standards, service charge accounts and insurance provisions together. Also check rent review dates, the method of review and whether the reviewed rent is linked to open market value, an index or another formula.
A business should understand how it can change or leave the premises. Assignment, subletting, sharing occupation and charging the lease usually require the landlord’s consent and may be subject to conditions. Alterations often need consent, with separate rules for structural work, internal fit-out, signage and mechanical or electrical installations. A break clause is effective only when its conditions are satisfied. The tenant must follow the notice procedure, pay sums due under the lease and comply with any vacant possession requirement. The review should also address security of tenure under the Landlord and Tenant Act 1954, renewal rights, dilapidations and the reinstatement of alterations at the end of the term.
Prepare a schedule of agreed amendments and unresolved points, then allocate each action to the landlord, tenant, surveyor, agent or other adviser. Commercial points such as rent, incentives and service charge caps should remain consistent across the heads of terms, lease, side letter and any licence for works. Before completion, check execution requirements, guaranties, rent deposit arrangements, conditions precedent, notices and registration obligations. A property solicitor’s Lease ‘MOT’ Review Service provides a structured review of an existing lease, while a new letting requires review of the full lease package and related documents.