A traditional lease is often an attractive option for established businesses or those scaling up. A commercial lease is typically structured in the following way:
- 5-10 year duration
- A break option available during the lease to end the lease within a certain window (“use it or lose it”)
- Total rent stipulated per annum
- Total service charge per annum
- Rent free period given to the tenant for up to 12 months if carrying out a fit-out
- Rent deposit required (3 to 6 months rent) to protect the landlord in case there’s a failure by the tenant to make payments under the lease
- Rent review half way through the lease by reference to an objective standard such as RPI
A commercial lease provides stability and certainty for businesses who prefer to plan their business operations some years in advance.
Of course, tenants typically still retain the option to sub-let or transfer the lease to another party (provided the landlord agrees) if they are experiencing financial difficulties.
