Why you need legal advice when taking on a commercial lease

Why you need legal advice when taking on a commercial lease*

*The information in this blog relates to England and Wales only

An average commercial lease is usually between 25 to 50 pages, contains clauses which have been prepared by the landlord’s solicitor, and is usually drafted in a way that is favourable to the landlord. The terms can be onerous and are often complex to understand. In the UK, commercial leases are governed by contract law, with limited statutory protection for tenants. At Gilson Gray, we have solicitors experienced in dealing with commercial leases who can:

• Identify risky clauses and negotiate more favourable terms.
• Explain your repairing, insuring, and dilapidation obligations.
• Ensure break clauses are legally effective.
• Help protect your business against costly disputes.
• Help to plan for the future growth of your business.

Common Pitfalls in Commercial leases

1. Full Repairing and Insuring (FRI) Obligations
   Many UK leases are FRI leases, meaning the tenant is responsible for all repairs, including structural issues, and must contribute to the building’s insurance. This can lead to substantial, unexpected costs.
2. Dilapidations Liability
   At the end of the lease, tenants may be required to restore the property to its original condition. Without proper legal protections, this can result in expensive claims from landlords.
3. Rent Reviews
   Leases often include rent review clauses (commonly every 3-5 years). If these are not clearly defined or capped, tenants may face steep rent increases tied to “upward only” provisions.
4. Break Clauses and Termination Rights
   If not properly negotiated, break clauses can be ineffective due to technicalities – for example, requiring strict compliance with notice procedures or conditions such as full rent payment and repair. Break clauses are strictly conditional and if you miss a step you could be tied in for years which could have significant cost consequences.
5. Lack of Flexibility
   Without the right to assign, sublet, or share occupation, you may be stuck with premises that no longer suit your business.

A well-negotiated lease can save you thousands of pounds over its term and legal advice at the outset is far more cost-effective than resolving problems later. Leases are high-risk legal documents. One mistake can have serious financial consequences.

Before you sign anything, speak to our Real Estate Partner, Shuhel Ahmed.

Find out more about our Real Estate services here.

The information and opinions contained in this blog are for information only.  They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice.  Before acting on any information contained in this blog, please seek solicitor’s advice from Gilson Gray.