Renting business premises

A commercial lease is a contract you negotiate with the landlord. The law adds few terms of its own, so most of what you must do as a tenant depends on what the lease says. Any responsibility the lease does not mention will usually fall to you.

What the lease decides

Check each of these in the lease before you sign:

• how long it runs, and whether a break clause lets you or the landlord end it early
• the rent, and any service charge on top
• who repairs and maintains the building
• whether you may pass the lease to another business or sublet
• whether the lease is protected by the Landlord and Tenant Act 1954

Repairs and moving out

The lease should say who repairs and maintains the property. When you move out, you may have to pay for repairs or return the property to the state it was in when you took it on. These repairs are called dilapidations, and the lease should set them out.

Under a full repairing and insuring lease you take on all repairs, including the structure and roof, and the cost of insuring the building. Before you sign, ask for a schedule of condition (a written and photographic record of the property's state) to be agreed and attached to the lease, so your repairs can be limited to the condition you took the property on in.

In England and Wales, damages for breaking a repairing obligation can never exceed the amount by which the disrepair reduces the value of the landlord's interest in the property.

Leaving early, assigning and subletting

A lease usually runs to its end date unless it has a break clause. To use a break clause you must give the notice it sets out. You may also need to meet other conditions, such as paying the rent by an agreed date.

Without a break clause, you can leave early only if the landlord agrees to end the lease (a surrender) or lets you pass it to another business (an assignment). Otherwise you must keep paying rent for the whole term.

Subletting means letting all or part of the premises to another business that pays rent to you. You still owe the landlord the full rent, even if your subtenant does not pay you. Assigning and subletting need the landlord's permission. In England and Wales, where the lease requires consent, the landlord cannot unreasonably refuse it.

Your right to renew in England and Wales

Part II of the Landlord and Tenant Act 1954 protects most business tenancies in England and Wales. A protected tenancy does not end on its expiry date. It continues until you or the landlord ends it with a notice under the Act, and either of you can then ask the court to order a new tenancy.

The landlord ends the tenancy by serving a notice between 6 and 12 months before the termination date it names. If your lease was granted for more than one year, you can instead request a new tenancy to start 6 to 12 months after your request. To have the court decide, apply before the date in the landlord's notice or the start date in your request, unless you and the landlord agree to extend that deadline.

The landlord can oppose a new tenancy only on grounds the Act lists. These include your failure to repair, persistent late rent or other serious breaches, an offer of suitable alternative premises, or the landlord's plan to redevelop or to occupy the premises. If the landlord wins only on redevelopment, own occupation or the uneconomic subletting of part, you are entitled to compensation when you leave.

Leases without the right to renew

The right does not apply to:

• a fixed term of six months or less, unless the lease allows it to be renewed or extended beyond six months, or you and anyone whose business you took over have occupied the premises for more than 12 months
• farm business tenancies, agricultural holdings and mining leases
• a tenancy your employer grants you because of your job
• a lease where you agreed to exclude the right before you signed
• a licence to occupy, such as space in a serviced office or co-working building, because it is not a tenancy

To exclude the right, the landlord must serve a warning notice on you at least 14 days before you sign or commit to the lease, and you must sign a declaration accepting it. If the notice arrives later, you must make a statutory declaration instead, still before you sign.

Business rates and other running costs

Business rates are charged on most non-domestic property, and you will probably have to pay them if you use a building or part of one for your business. The bill depends on the property's rateable value. Relief can reduce or remove it, especially for small properties, and the schemes differ in England, Wales, Scotland and Northern Ireland.

The lease can also require you to pay a service charge on top of the rent.

Health and safety in rented premises

You must assess the health and safety risks in your workplace and act to remove hazards. You will normally be responsible for fire safety, the safety of electrical equipment, gas safety and managing asbestos. The landlord is responsible for anything the lease gives them, such as communal areas, and you must take reasonable steps to make sure they carry it out.

Before you sign