Commercial lease Solicitors

Clear legal guidance for both landlords and tenants

Our experienced commercial lease solicitors offer clear legal guidance for both landlords and tenants.

What is a commercial lease?

A commercial lease is a legally binding agreement between the landlord and tenant of a commercial property. It will include:

The rent amount and when this should be paid
The rights and responsibilities of both parties, such as who is responsible for repair works
The length of the lease and what will happen when it ends

What is the difference between a commercial property lease and residential property lease?

There are many differences between a residential lease and a commercial lease such as:

Residential property leases (typically 6 months – 2 years), are shorter than commercial property leases (can be up to 25 years).
A commercial tenant has a higher level of responsibility for repairs and maintenance than a residential tenant. For example, in commercial property the tenant will typically be responsible for all non-structural repairs.
The landlord is less responsible for health and safety than in a residential property.
Commercial tenants have enhanced security because they have the right to remain in the property after the lease has ended, unlike residential tenants who could be evicted.

For more information on residential property leases, visit our residential property page.

What are the different types of commercial lease?

Gross lease: In a Gross lease you pay a single flat fee rent payment which the landlord will calculate based on an estimate of the costs of insurance, tax and maintenance, plus rent. This is often expensive as the landlord may overestimate these fees. This type of lease tends to be for short term commercial spaces.

Net leases: These leases involve paying some or all of the expenses associated with the property.

Single net lease: With this lease you pay the tax, and your landlord pays the other expenses. It is not common to have a single net lease in the UK.

Double net lease: This type of lease is common wherein a landlord owns a whole building with multiple tenants renting individual units. The tenant pays for the tax and insurance, and the landlord pays for structural and maintenance expenses.

Triple net lease: Within this lease you are responsible for paying the tax, insurance and maintenance costs for the property.

What rights do commercial tenants have without a lease uk?

Business tenants without a written lease have limited protections under the law. If they have been in occupation for more than 12 months and the landlord has accepted rent payments, then they have the right to be given a new lease when the existing lease expires, this is called ‘security of tenure’. Additionally, tenants can claim compensation if the landlord takes back possession of the property.

What are oral commercial leases?

An oral commercial lease is an agreement between a landlord of a commercial property and a tenant without written documents. They are technically legal in the UK, if the landlord has accepted rent and if the lease was less than three years long, but they are hard to enforce or resolve disputes in court.

It is recommended that you have a written commercial lease agreement drafted by an experienced commercial property solicitor to ensure that both parties are protected in the case that a dispute occurs and or that you need to go to court.

How can Merriman Solicitors (incorporating AB Family Law) help?

Our team has extensive experience in dealing with commercial leases. We have helped numerous clients safeguard their interests with sound commercial property lease agreements. Should you wish to speak to one of our professional lawyers, please call us on 01672 515846, or visit our offices. Get in touch with us on 01672 515846, visit one of our offices or fill in our online contact form.

Why choose Merriman Solicitors (Incorporating AB Family Law)?

Clear and concise legal support tailored to your specific property needs

Expert property solicitors with vast experience in both buying and selling

Expert property solicitors with vast experience in both buying and selling

Comprehensive assistance with all landlord and tenant related matters

Get in touch

Frequently asked questions about commercial leases

What is the most common type of commercial lease?

The most common type of commercial lease is a double net lease. This means that the landlord pays for any maintenance on the property, and the tenant is responsible for paying tax and insurance on the property. This is common in situations where the landlord owns the whole building and the tenant is renting an individual unit.

Do you pay tax on commercial property rent?

Depending on the specific circumstances, commercial property rental income can be subject to multiple taxes including:

Income tax
Stamp Duty Land Tax (SDLT)
Corporation tax
VAT

This is a complex matter and it is advisable to enlist the support of a qualified commercial property solicitor to ensure you pay the correct taxes and amounts.

Do you pay stamp duty when you rent a commercial property?

Yes the tenant is responsible for paying SDLT on the commercial property that they rent. It is a very complex system so it is advisable to enlist the help of a qualified commercial property solicitor to guide you through what you owe. It is common for people to mistakenly overpay on this tax and the reclaiment process is very time-consuming so best avoided.

Who pays for a commercial lease assignment?

Commercial lease assignment means transferring the lease from one party to another, and the new tenant takes on all of the responsibilities that the previous tenant held. Costs involved in assigning a commercial lease include:

Legal fees: usually shared by the incoming and outgoing tenants, not the landlord.
Landlord’s costs: either paid by the new tenant or shared between the incoming and outgoing tenant.
Fulfilling lease obligations: the outgoing tenant may need to bring rent payments up to date or carry out essential repair works before the lease is assigned.
Renewing EPC certificate: if it has expired, this is the outgoing tenant’s responsibility to sort.

Can a landlord refuse to assign a commercial lease?

A landlord can only refuse to assign a commercial lease if they have valid reasons for doing so. Some reasonable grounds for refusal may be concerns about the prospective tenant’s ability to pay the rent, or their ability to keep up with repairs and maintenance. These reasons must stand up in court.

Can a commercial lease be terminated early?

In certain circumstances, a commercial lease can end early. Some of these include:

Break clause: If there is a break clause in the lease originally, this may provide a way to terminate the lease early without consequences.
Assignment: A tennant may be able to find someone else to take over the lease, but the landlord has to agree.
Surrender the lease: The tenant may be able to negotiate with the landlord to give up possession of the property. The tenant may need to pay the landlord to do this.