Becoming a Landlord – A Quick Guide when Agreeing a Commercial Lease

When becoming a landlord and agreeing terms of a lease, it’s imperative transactions proceed quickly and smoothly. It’s essential in the present market that if you are thinking of becoming a landlord, you acquire expert advice as soon as possible so we can help you agree terms.

Below are some key points to deal with when it comes to agreeing terms with a prospective tenant:

• How suitable is the Tenant?
  Be sure to get references as and when applicable, and ensure the tenants that move in will suit the property and the area.

• Proposed Use of the Property
  How will the property be used, and are there are issues surrounding planning permission for this?

• Security
  You will need to make sure the tenancy is financially secure – either in the form of a rent deposit or guarantor.

• Length of the Term
  In the contract, you will need to stipulate how long the minimum tenancy will be.

• Break Clauses
  A break clause is a term in an agreement enabling a tenant to leave a property before the tenancy period comes to an end.

• Right to Renew
  Many commercial property leases have the ability to renew at the end of the tenancy. However, the right to renew can be excluded for a number of reasons. Contact us for more information or read this on Commercial Lease Renewal.

• Maintenance, Decoration and Insurance
  When becoming a landlord, issues around maintenance and decoration will have to be decided. It’ll need to be defined who looks after this and keeps up with required tasks.

• Pre-Occupation Works?
  Is there any work to be carried out before the tenant moves in? It’s likely that issues around pre-occupation will look at what affects the building as an asset as well as structural and building integrity.

• Rent Holidays/Stepped Rents
  A stepped rent is rent which increases over the period of the lease. Any adjustment of rent will need to be decided early on in the process.

• Is Sub-Letting Allowed?
  It’s worth deciding at an early stage of becoming a landlord whether the tenant can assign or sub-let. Sub-letting is a complicated area, and it depends on the original tenancy agreement.

• Asbestos and Energy Performance Certificates                                                    It’s obligatory to carry out structural and electrical checks on your commercial property before letting it out. Obtain energy performance certificates at the earliest opportunity.

• Is the Tenant Paying Surveyor and Legal Fees
  In some cases it is possible to stipulate that the tenant pays associated fees relating to the lease of the property.

• Is Lender’s Consent to the Lease Required?
  The mortgage lender will need to be notified if you are letting out your property and can have the power to ask you to stop letting.

• Deadlines and Timescales
  It’s important to set a framework when becoming a landlord – set yourself deadlines and timescales and work to and set goals depending on agreed targets

• Proper advice
  And most of all you need to get proper advice as there the terms of the deal you agree need to be recorded properly in the lease and there may well be detail points you have not thought about and which need to be agreed. Finally make sure any agreement you reach with the tenant is a provisional one and subject to the formal legal documents.

At Burt Brill and Cardens we advise a large number of commercial property owners when it comes to becoming a landlord. From single property owners to investment companies with large property portfolios, we have a wide range of experience and will make no charge for talking to you about your enquiry. You may also be interested in our article on 7 Essential Terms to Include in Your Commercial Lease Agreement.

Telephone us on 01273 604123 or email at enquire@bbc-law.co.uk.

Otherwise, you can go back to find out more about Commercial Property Law or our Commercial Property services for Landlords.