Typical provisions in a commercial lease

A lease agreement is a legally binding contract which sets out the terms and conditions of the agreement between the landlord and the tenant.

• Duration of the lease – the average length (term) of a new lease is 4.5 years, but leases usually have break clauses (specific dates after which you can end the lease by giving notice to the landlord).
• Rent and any rent-free periods – rent will usually be exclusive of VAT, the service charge and any insurance payments.
• Rent review provisions – these are dates on which the rent is reviewed against the market, and is either increased or decreased depending on the market rate.
• Dealing with the lease – there will likely be provisions that deal with the tenant’s ability to transfer the lease to another tenant. These are usually prohibited without the landlord’s consent.
• Permitted alterations – tenants will usually be allowed to make non-structural alterations to the inside of the property and to partition the premises, with the landlord’s consent.
• Repairing and decorating obligations – these usually require the tenant to keep the property in good condition. The tenant may be required to paint the building every year, make minor repairs or make good any damage caused by a fault of the tenant.
• Guarantees – sometimes a landlord may require a guarantee from another party to ensure the rent will be paid and other obligations will be observed if the tenant is unable to do so.
• Insurance – the landlord will usually be responsible for arranging insurance for the property, and for repairing damage caused by an 'insurance risk' (e.g., fire, flooding, etc.).

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