Commercial leases sit at the heart of the UK economy. It is estimated that there are over 3.2 million business premises across the UK and, more than half of all commercial property is rented, meaning the vast majority of these business sites are occupied under a commercial lease.
In a landscape this large, and this lease‑dependent, the fine print matters. A single lease clause can shift cost, risk, or control in ways landlords and tenants never intended.
Below we have highlighted some of the most common issues we see in practice, and how early legal advice can prevent delays and costly surprises.
Practical considerations
Before considering the terms of a lease, a tenant should carry out a thorough investigation of the property to ensure it is suitable for its intended use and occupation. Issues often arise where non-legal matters have not been addressed prior to instructing solicitors, which can result in unnecessary delays in the grant of a lease.
Commonly overlooked considerations include:
- Utilities and Services – A tenant should confirm that the property has connections to all required utilities, such as gas, electricity, and water, and that the available capacity is sufficient for their intended use. If additional services are required (for example, fibre internet, mobile network coverage), early discussions with service providers and the landlord are essential to confirm feasibility.
- Planning Matters – It is critical that the property benefits from the appropriate planning consent for the proposed use, to avoid the risk of enforcement action. Tenants should also review any conditions attached to the planning permission, as these may restrict or impact their intended use. While solicitors can verify permitted use through searches, early investigation by the tenant is advisable to prevent delays later in the transaction.
- Energy Performance Certificate (EPC) – An EPC should be made available when the property is marketed. Tenants should ensure that the property meets the minimum required rating for letting and consider whether improvements are needed to enhance energy efficiency. Further discussion on EPC requirements can be found here.
- Condition of the Property – Instructing a surveyor to report on the condition of the property is essential. The findings can inform negotiations on rent and repairing obligations and assist the tenant in budgeting for any necessary works.
- Statutory Compliance – Commercial tenants must comply with various statutory obligations, including the monitoring of asbestos and carrying out regular fire risk assessments. The landlord should be able to provide copies of relevant reports at an early stage.
Property
It may sound strange, but one of the most common areas of misunderstanding comes from poorly defined, or unclear drafting of the description of what is the ‘Property’ within the lease.
This is key as a tenant’s repairing liability will link back to the extent of the ‘Property’ they are responsible for. If this is unclear, this can lead to costly disputes at the end of the term of the lease.
A lease should set out a full description of the Property and ideally, include a plan, which shows the exact extent of the Property being demised to the tenant.
Repairing Obligations
Both parties will need to be clear on their responsibility when it comes to keeping the Property in repair. A tenant will be keen to reduce their liability, and a landlord will want to ensure that their investment is kept in a good condition.
There is a vast history of case law surrounding this issue and without proper drafting, definitions, or schedules, in the lease, this can lead to costly dilapidations for the tenant, or a situation where a landlord cannot recover the true cost of disrepair.
Break Clauses
The purpose of a break clause is to offer a tenant (or a landlord) flexibility. This is hugely important for a tenant who may be uncertain of their future property needs and may need the ability to terminate the lease early.
They can, however, be extremely inflexible. As such, a tenant will want a break clause that includes achievable conditions and clarity on break dates and apportionment of any overpaid rent. A landlord will want similar things, but will also want safeguards in place, so that a tenant cannot ‘walk away’ from a property (and their responsibilities under the lease) if they leave the Property in a poor condition or leave rubbish or stock on site.
Alienation Clauses
Alienation refers to a tenant’s ability to transfer their interest in a lease to another party, by way of an underlease or an assignment.
Ambiguous assignment and underletting provisions can result in leases being transferred to unsuitable assignees or underlet at below-market rents. This can have a significant impact on the landlord’s investment value and control.
Rent review
Clear drafting on how and when rent reviews are to take place is key to ensuring both parties know what to expect and when. There are many different mechanisms for carrying out a rent review and it is important that the method of calculation is agreed at an early stage, as this can significantly impact the parties’ costs/investment value.
Service Charge
Service Charge often features within commercial leases, especially where there are shared areas such as car parks, reception areas, accesses etc.
A landlord will want to ensure that they can attributable a portion of the cost of upkeep of these areas to the tenant and the tenant will want to ensure that these costs do not spiral.
Careful drafting of what is included within the charge and how/when the charge is to be paid brings clarity and comfort to the parties.
Hidden risks
As you will see, there is ample opportunity for ambiguity and often what appears to be familiar wording can still hide issues, such as an inflexible break clause or unclear repairing obligation, that can create problems for the landlord or tenant in the future.
As part of this series, we will be looking at the above-mentioned clauses in more detail. Please do follow along!
Ellisons supports landlords, developers, and investors across Essex and Suffolk by reviewing, negotiating, and drafting commercial leases that align with long‑term investment strategies. We identify risks early, strengthen key protections, and ensure your documents work for you.
