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Commercial Leases Business

Found the perfect property to lease for your business? We can help you!

On this Page:

  1. Checklist of Basic Terms
  2. What Happens When You Instruct Us
  3. Post Completion
  4. Calculating Stamp Duty
  5. Why Do You Need A Solicitor?
Lawyers Team - GWH Solitcitors

Checklist of Commercial Lease Terms

This list is not exhaustive, but should give you an idea of some of the general terms you need to be thinking of when you negotiate a commercial lease:

Length of term – how long is the term of the lease? If the term exceeds 7 years, you will need to register the lease with HM Land Registry Rent – how much is the rent? Is VAT payable on the rent? Are rent payments due monthly or quarterly? Is there a rent free period? When and how will the rent be reviewed and changed Is there a break clause to allow early termination of the lease? Is a service charge payable? If so, how is this apportioned and how is this calculated? How often should you pay it, and what does it cover? Insurance rent; the landlord has a legal obligation to pay insurance for the external of the premises, the tenant usually pays insurance rent to reimburse the landlord. How much insurance rent are you being asked to contribute?

What is the landlord’s permitted use? This is especially important as it must be consistent with your intended business activities, and must also be compliant with the property’s class usage How much deposit are you required to pay? Are business rates, taxes and utilities payable by the commercial tenant? Who is responsible for maintaining the property, including its fixtures, fittings and equipment? Who will pay for the landlord’s legal costs? How often are you required to redecorate the premises? Are there any other requirements, for example, do you need to apply for any permissions or licences?

What Happens When You Instruct Us?

After you have accepted an offer on a commercial lease, we contact the landlord’s solicitors to request a commercial lease pack. This usually consists of a draft lease, rent deposit deed, lease plan, the registered title, title plan and in some cases, replies to commercial property standard enquiries (CPSEs). There may be other relevant documents in the lease pack depending upon the type of property and the landlord’s specific needs.

We can then order search reports while we review the commercial lease pack and investigate the title documents.

Once we have reviewed the lease pack and search reports, we will send you a summary of our findings and the commercial lease terms and raise any outstanding enquiries with the landlord’s solicitors. We will help resolve any outstanding issues so the parties can move forward to complete on the documents.

Post Completion

We will post a copy of the commercial lease as signed by the landlord to you once we receive it from the landlord’s solicitor. We will also forward the commercial lease as signed by you to the landlord’s solicitors.

If the commercial lease has a term of over 7 years, we are legally required to register the lease with His Majesty’s Land Registry (HMLR). You will also need to pay stamp duty on the lease.

Calculating Stamp Duty (SDLT)

Stamp duty can be calculated by initially working out the Net Present Value (NPV). The NPV is based on the total rent over the life of the lease and the purchase price of the commercial lease (the “lease premium”). You will not pay SDLT if the NPV is less than £150,000.

SDLT can be calculated using the percentages in the table below, or alternatively by using the SDLT calculator.

Net present value of rent SDLT rate £0 to £150,000 Zero The portion from £150,001 to £5,000,000 1% The portion above £5,000,000 2%

Why do you need a solicitor?

It may not your intention to instruct Solicitors in connection with a commercial lease. Whilst that is of course your right and privilege, we must point out that entering into a commercial lease does of course create complex legal obligations and you may well wish to consider whether to instruct a Solicitor. There are also various technical post completion tasks that need to be performed which are not easily performed by a non-Lawyer.

The landlord will usually use a solicitor who will only be acting for the Landlord and will not be able to give you any advice. In most cases, the landlord’s solicitors may make it a requirement that you instruct a solicitor in order that the landlord is protected and everyone has the outcome they need.

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