Solicitors for a shop lease
We regularly advise on leases for shop premises. This may include advising landlord or tenant, drafting of the commercial shop lease, advising on it, or legal advice on selling/transferring the shop lease or sub-letting. In addition, we advise on termination of shop premises leases or disputes between landlords and tenants.
Renting a commercial space for a retail unit or a shop is not entirely different from a residential landlord and tenant agreement. As a shop owner renting a space you will sign a tenancy agreement with the owner of the retail complex or commercial space and both of you will be bound by the terms of the agreement.
What to include in a shop lease agreement?
The main clauses of a shop lease agreement should include the basics such as:
Landlord and tenant’s details (full names and addresses or, if they act for a company, their registration number if incorporated in England and Wales and address of the registered office)
Address or description of the property the lease relates to (if it is a retail unit within a bigger shopping complex the description might require references to an attached plan of the complex, such as Unit A, ground floor, marked red on an attached plan)
Term of the lease: the length of time which the lease is granted for. This is normally negotiated before the lease is agreed and is usually fixed for a term of 5 or 10 years
Break clause and notice required if any of the sides decides to terminate lease early
Amount of rent (and whether it is inclusive of service charge for maintenance) and periods of payment (monthly, quarterly, yearly)
Rent review clause might apply on landlord’s discretion, this will take place after set periods of time
Alterations clause: the tenant might be permitted small alteration or none, the landlord’s consent might be required for certain alterations
Decorations and repairs: specify who is responsible for alterations and whether the tenant is permitted any decorations and if so, who will be responsible for bringing the property back to its original state
Subletting: some landlords may agree for their tenant to sublet part or all of the property during their lease
Landlord and tenant’s obligations under the lease such as rubbish disposal, maintenance, external repairs, health and safety regulations etc.
Indemnity: the landlord might require the tenant to indemnify him against any expenses, claims, damage or costs for the duration of the lease
Purpose of the lease: the type of use the tenant is signing the lease for. The shop may only be let for a certain purpose such as grocery store and the landlord will oppose any change of use such as electronics or a hot food café.
Returning the property back to the landlord at the end of the lease: this clause specifies who is responsible for making the property usable for the next tenant.
Factors detailed above will of course overlap and this is why it’s generally dangerous to just rely on a template despite the fact this may be cheaper. For example, if you are a Landlord and you are letting t a small independent business, perhaps a restaurant, you should already know that there’s a good chance that business may not succeed statistically. So, is there much point in having a very long lease? Would a short commercial shop lease be better? If the shop lease were to be for a restaurant you should also think about the likely major fitting out and alterations a tenant may want to carry out and factor that in. If you are perhaps letting a shop to a major retail chain, considerations will be very different and almost certainly, a bigger business will also not want to start off using a shop lease template agreement or to proceed without lawyers on both sides.
Negotiating a shop lease
Negotiating a commercial shop lease is more complicated than a residential lease and it might be a good idea to instruct solicitors with expertise in the process. There are commercial implications for the business which must be taken into account when negotiating a lease such as whether this particular property the best solution for the business’ purposes: is it in the convenient location, does it have all the required amenities, will it profit the business to have a retail unit within a shopping complex or would it benefit from a high street location etc.
A shop owner should have a clear vision of what they would like to achieve by renting space for a new shop and a commercial lawyer’s expertise could prove useful in clarifying the implications and terms of a shop lease.
Drafting a shop lease agreement
Once the terms of a lease are negotiated and agreed between the landlord and tenant they should be written down in a matter which is clear and understandable for both parties. This again can be facilitated by instructing us to make sure all the required formalities are in place.
Get in touch today for a quote whether you are a Landlord or a Tenant considering entering into a lease for shop premises.
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