The lease terms

What’s in a lease

What’s in a lease

A lease is a document that creates a legal relationship between the landlord and the tenant.  There are laws that regulate relationships between owners and occupier of property, specifically the relationship of landlord and tenant, and their respective obligations to third parties. However, generally speaking the landlord and the tenant will be bound by the specific words in the lease and it is essential to have an understanding of what they say and what they mean.

  • You need to ensure that the parties to the lease are correctly described. [Parties to the lease]
  • It is essential to get the description of the property right because this can affect the repairing obligation and your ability to use the property. You should ensure in particular that the repairing obligation do not require you to, or present you with the risk of spending money on the property that you do not or will not have. [Repair]
  • You should be certain whether the rent will be subject to additional VAT payment at 20%.  This may be the case even if the rent in negotiations and in the definitions in the lease does not mention it. [Value Added Tax]
  • You should make sure that the term is of an adequate and suitable length for you [Lease term]
    You should consider whether break rights in your favour should be appropriate and if landlord’s break rights are proposed, whether they will potentially damage your operations. [Break rights]
    Rent reviews can be highly complex and if a proposed or draft lease includes rent review provisions that do not simply relate to an index, you should take legal advice.  As far as index linked rent reviews are concerned, you should consider whether your property costs should be linked to the price of a basket of shopping etc. [Rent and rent review]
    You should consider whether the service charge provisions are fair or might expose you to unexpected cost. [Service charge]
    If you wish to or are likely to wish to carry out alterations to the property you should check that the lease permits this and where appropriate obtain permission from the landlord. [Alterations]
    Most leases do not permit you to share occupation with others and you should consider whether the lease gives adequate rights to support collaborative working with other organisations and use of excess space to raise income. [Letting and hiring your property]