Guide

Renting business premises

Property rental agreements

You can rent business premises by leasing them. If you require premises for a short term - for instance, to complete a large order - then consider a licence rather than a lease.

Leasing business premises

Leases typically have agreements of between three and 25 years and can offer long-term stability.

You will probably be able to negotiate the length of your lease with your landlord and should certainly check before signing the contract.

Other than the rent itself, key areas of the contract that you should study include:

  • lease length
  • break clauses
  • service charges
  • dilapidations (an amount payable to the landlord at the end of the lease)
  • responsibility for maintenance and repairs to the building and external areas

Lease length

Rent is usually paid quarterly in advance. However, you may be able to pay monthly. This can form part of negotiations with your landlord. If your business is new, you may want to consider a short lease of three years or less or ask for a break clause.

Service charges in rental properties

Check how much these are and what services they cover, such as cleaning and heating. Establish what facilities you may be sharing with other tenants. Service charges are an additional cost to the rent and can be more expensive than if you organise them yourself. You have the right to ask the landlord for a summary of how the service charge is calculated and for any paperwork supporting the summary eg receipts. Your landlord must provide this information as it is a criminal offence not to. See the Royal Institution of Chartered Surveyors’ code of good practice on service charges.

You have the right to remain in occupation of the premises and renew the lease once it expires, unless you and your landlord have agreed otherwise. However, there are specific cases when the landlord can refuse to grant a renewal. See business leases: renewing and ending.

Licensing business premises

A licence could be of benefit to a small business looking for a short-term property solution, of up to one year. Licences generally offer more flexibility and can usually be terminated at short notice on both sides. However, you would not have an automatic right to renew a licence and it is always advisable to seek professional advice, eg from a chartered surveyor or solicitor.