A lease that says nothing about what a property’s required use can be used for any purpose that is not illegal. However, all leases will contain a number of provisions that will affect how the property can be used.
- There will usually be a permitted use clause in a lease, most commonly stating that a property can only be used for a certain purpose, but occasionally stating that the property must be used for that purpose. In addition, there will often be clauses prohibiting certain activities, for example use as a residence, political activities and sales by auction, for example.
- Tenants should look at proposed use provisions critically. A permitted use as “offices” may cover a wide range of activities that might include training, and dealing with off the street public visitors. It should be noted that there will be planning issues relating to this type of activity. [Town and County Planning]
- Less obviously, clauses that are apparently for other purposes can significantly restrict the how an organisation can use a property. The obligation to observe statutory requirements will mean, for example, that in addition to any action that a local planning authority might take, the landlord might also seek to apply for an injunction, terminate the lease by forfeiture or exact some kind of compensation for a breach of planning permission.
- The provisions relating to limitations on persons who can occupy and use the property may also be very relevant. These are often found in an “alienation” clause which deals with underletting the property, or transferring (assigning) the lease to a new tenant. [Alienation]
- Very commonly (almost universally in the case of leases of commercial premises) these clauses restrict the occupation of the property to the tenant, and prohibit any sharing with others. [Alienation]
- You may be able to negotiate some flexibility, and some landlords will be flexible even after the lease is granted. Some landlords will, for example, accept a charity sharing property with other charities, but would be much more reluctant to agree allow a business tenant to share with other businesses. [Principles of negotiation of new leases]
- Organisations should also, especially in the case of a longer lease, think about future developments. A permitted use clause that provides that you will supply services to a certain number of service users may cause problems if you wish to increase your activities, or indeed reduce them.