Commercial Lease Solicitors

Commercial Lease Legal Services

A commercial lease is one of the most significant legal commitments your business will enter into. A poorly drafted or improperly negotiated lease can expose you to years of unforeseen liabilities — from repairing obligations running into hundreds of thousands of pounds to being unable to exit premises that no longer suit your business. Legal Merchant's specialist commercial lease solicitors protect your interests at every stage, whether you are a landlord granting a new lease or a tenant taking on commercial premises.

New Commercial Leases

Taking on a new commercial lease is a major commitment. Even a relatively short 5-year lease on modest premises can expose a tenant to tens of thousands of pounds in rent, service charges and repair costs. Our solicitors advise tenants on:

• Heads of Terms — reviewing and negotiating the key commercial terms (rent, term, break clauses, rent-free periods, repairing obligations) before the formal lease is drafted
• Lease drafting and review — examining the landlord's draft lease in detail, identifying onerous provisions and negotiating improvements
• Repairing obligations — the scope of a full repairing and insuring (FRI) lease versus more limited obligations; the importance of a schedule of condition to limit your liability
• Alienation provisions — your rights to assign, sublet, charge or share occupation of the premises during the term
• User clauses — ensuring the permitted use is wide enough for your current and future business activities
• Alterations — your rights to carry out fit-out works and the obligation to reinstate at the end of the term
• Break clauses — negotiating a well-drafted break right that gives you genuine flexibility
• Security of tenure — whether your tenancy will have LTA 1954 protection and the implications of contracting out

Lease Renewals

When a protected commercial lease approaches expiry, both landlord and tenant have legal rights and obligations under the Landlord and Tenant Act 1954. Our solicitors advise on:

• Serving and responding to s.25 notices (landlord's notice) and s.26 requests (tenant's request)
• Negotiating the terms of the new lease — rent, term, break clauses and other provisions
• Opposing lease renewal on statutory grounds (redevelopment, own occupation, persistent rent arrears)
• Interim rent applications — determining the rent payable during the period between lease expiry and renewal
• Court applications for new tenancies where agreement cannot be reached

For further detail, see our Business Tenancies and Security of Tenure page.

Lease Assignments

A lease assignment transfers all of a tenant's rights and obligations under the existing lease to a new tenant (the assignee). Our solicitors advise both assignors and assignees on:

• Reviewing the lease to confirm assignment is permitted and identifying any conditions or restrictions
name="Obtaining landlord's licence to assign (LTA) — negotiating the conditions to be imposed on consent
• Authorised Guarantee Agreements (AGAs) — where the outgoing tenant is required to guarantee the performance of the assignee
• Overriding leases and guarantor obligations
• Advising assignees on their obligations under the existing lease before they commit

Subletting (Underletting)

A subletting occurs when a tenant grants a new sub-lease of all or part of the premises to a subtenant, whilst retaining its own tenancy. Our solicitors advise on:

• Whether subletting is permitted under the existing lease
• Obtaining landlord's consent — licence to underlet
• Drafting the underlease to protect the head tenant's position
• Ensuring the rent payable under the underlease complies with any restrictions in the head lease

Lease Surrenders

A lease surrender is an agreement between landlord and tenant to bring the lease to an early end. This can be beneficial to both parties — a tenant wanting to exit premises that no longer suit their business, or a landlord wanting vacant possession for redevelopment. Our solicitors negotiate and document surrender agreements, advising on:

• Surrender premium — the payment (if any) by the tenant to the landlord (or vice versa) in consideration for the surrender
• Dilapidations — agreeing the reinstatement and repair position at the time of surrender
• SDLT on surrender premiums
• Release of guarantors from future obligations
• Conditional surrenders — where surrender is contingent on a new letting or planning consent

Licences to Alter

Most commercial leases require a tenant to obtain the landlord's written consent before carrying out alterations to the premises. Our solicitors handle the preparation and negotiation of licences to alter, advising on:

• Whether the proposed works require consent under the lease
• Conditions that the landlord may impose — supervision, reinstatement obligations, approved contractors
• Planning and building regulations compliance for proposed works
• Reinstatement obligations at the end of the term

Key Commercial Lease Terms Explained