Taking on Commercial Premises? What to Check Before Signing a Lease

Choosing new business premises is an important decision. The right shop, office or industrial unit needs to suit your operations, your budget and your plans for the future.

An attractive location and an affordable headline rent are useful starting points, but they do not tell the whole story. Before committing, take time to understand the building, the proposed lease and the responsibilities you will be taking on.

This guide focuses on commercial premises in England and Wales.

Understand the full cost of occupation

Start by building a budget that goes beyond rent. Ask about business rates, service charges, insurance contributions, utilities and any deposit or guarantee requirements. Establish whether VAT will be charged on the rent and other payments.

Allow for the cost of making the premises ready for your business, too. An empty unit may need lighting, data connections, decoration, equipment or other fit-out works before you can begin trading.

If a rent-free period is offered, clarify its purpose and timing. Consider how the costs will look once any initial incentive has ended.

Check what is included in the lease

Make sure you understand the extent of the premises. Does the letting include parking, external storage, a yard or shared facilities? Who controls access, and are there restrictions affecting deliveries or opening hours?

For example, a unit may appear suitable for a distribution business but have access arrangements that do not accommodate its vehicles. An office may have enough desks but insufficient parking for staff and visitors.

Write down the features your business needs and check them against the proposed terms.

Look carefully at the building’s condition

A viewing helps you assess layout and presentation, but it is not a substitute for a detailed inspection. Ask a commercial surveyor about the appropriate level of investigation for the building and your intended occupation.

Discuss the proposed repairing obligations before signing. Depending on the wording, an obligation can extend to defects that existed before you moved in.

Where negotiated, a schedule of condition can record the starting condition and help limit repairing obligations. It needs to be properly reflected in the lease; keeping your own photographs does not automatically achieve that protection. The RICS small business property guide explains why these matters should be considered at the outset.

Think beyond the first year

Consider how long you want to occupy the property and what could change during that period.

Discuss lease length, rent reviews, any break clause, renewal arrangements and the ability to assign or sublet. Ask your solicitor to explain notice requirements and conditions rather than assuming that a break date provides an automatic exit.

Clear heads of terms help identify the main points before detailed legal drafting. The RICS Code for Leasing Business Premises provides a framework for these discussions.

Confirm that the premises suit your business

Check the permitted use under the lease and discuss any planning, licensing or landlord consent requirements with your advisers.

Raise proposed alterations early. If your business needs extraction equipment, additional power, signage or internal partitions, establish whether the work is feasible and what approvals are needed.

Bring your advisers in early

Your commercial agent, surveyor and solicitor have different roles. Together, they can help you assess the opportunity, understand the building and review the agreement.

Considering new business premises? Contact Winfields to discuss commercial property opportunities and surveying advice before you commit.

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Found the right business premises? Winfields explains how to assess occupation costs, building condition and commercial lease terms before committing.

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Taking on commercial premises? Read Winfields’ guide to lease costs, repairs, break clauses and practical checks before signing in England and Wales.

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