Commercial Property Rental Agreement

There are two main types of rental agreement, leasing (which is more common) and licensing which is a shorter-term option

Leasing

For a longer-term agreement you will probably be looking at a lease, which usually run for terms of 3 to 25 years. You may be able to rent on a rolling-monthly basis, which is best suited for small businesses. Some leases are inflexible, tying you in to the whole of the pre-agreed lease length, negotiation before signing the lease can often result in more agreeable terms.

Service charges are an additional cost over and above the rent, often covering such things as cleaning and heating, investigate whether you can organise them for yourself as it may prove cheaper. You do have a legal right to challenge service charges, but this is invariably more costly than negotiating at the start of the agreement.

Before entering into a lease ensure you understand your rights under the Landlord and Tenant Act 1954; which affords you the right to remain in occupation of the premises and renew the lease once it expires (excluding some specific circumstances).

Licensing

Licence agreements run for up to two years and can be terminated at short notice - bear in mind that this is true for both parties - sometimes as little as one month. Unlike a lease, you do not have an automatic right to renew a licence agreement. A license can be a good way of trying out a new property with minimal commitment before moving on to a lease.

Next: The practicalities of renting a commercial property