Clear, sensible advice for landlords and tenants on commercial leases and licences to occupy
Commercial leases are a complex area of law and a big investment for everyone involved. It is vital to ensure that there is a clear and robust legal framework governing the relationship between commercial landlords and tenants so that all parties know exactly what is expected of them.
Having the right commercial leases or licence to occupy in place will go a long way to avoiding misunderstandings and disagreements in the future. At Stephen Rimmer, our experienced commercial property team can draw up a comprehensive and unambiguous commercial lease that clearly sets out the rights and responsibilities of commercial landlords and tenants.
How we can help with commercial leases and licences to occupy
Our commercial property team has extensive experience across a range of sectors. Our services include the following:
- Negotiating and drafting commercial leases
- Commercial lease renewals
- Ending a commercial lease
- Licences to occupy
- Commercial lease disputes
Consult our commercial lease solicitors in Eastbourne and Hastings
For assistance with any aspect of commercial leases or licences to occupy please contact a member of our team for a no obligation discussion:
- Call: 01323 434420
- Email: firstname.lastname@example.org
- Or pay us a visit at 28 – 30 Hyde Gardens Eastbourne East Sussex BN21 4PX
Our commercial lease and licence to occupy services
Negotiating and drafting commercial leases
Once a tenant has been found for commercial premises, both parties will need to agree heads of terms.
The heads of term for a commercial lease is a document setting out the basic details of the agreement you have reached, such as:
- The rights that go along with the property
- The amount of the rent and when it will be paid
- The length of the lease
- Whether it can be assigned
- The permitted use of the property
- A break clause allowing the lease to be ended early
- Exclusion of security of tenure
- The amount and conditions of the deposit
The landlord’s commercial property solicitors will then draw up the commercial lease agreement, using the contents of the heads of terms. The tenant’s solicitors will review the lease and it will generally be negotiated at this point until both parties are happy with the contents.
Commercial lease renewals
A commercial tenant generally has the right to renew a lease unless the right to do this, known as security of tenure, is specifically excluded in the lease.
If security of tenure has not been excluded, the lease can renew automatically, although the tenant has the right to ask for a new lease that reflects the current open market rent. A landlord can also do this, for example, if commercial rents are rising.
In requesting a lease renewal, between 6 and 12 months’ notice must be given before the new lease is to commence. A proposed new lease will be provided and the parties will negotiate until an acceptable form is agreed upon.
If no agreement can be reached, then an application can be made to the court to decide on fair terms for the new lease. This can be a lengthy process and it is advisable to seek legal advice before embarking upon such proceedings as failure to adhere to deadlines can mean a loss of rights.
Ending commercial leases
It is not always easy to end commercial leases. It is not simply a matter of handing back a property or serving notice to leave on a tenant. The lease will govern what is permitted. If it contains a break clause, then it may be possible for the lease to be ended early.
If the lease has not excluded security of tenure, then the landlord will be restricted as to how and when the lease can be ended. It will only be possible to take the property back for one of the following reasons:
- To develop the property
- For personal occupation
- Where only part of the premises has been leased to the tenant and a higher rent would be possible if it was to be leased as a whole
- Where the tenant has a history of non-payment of the rent or breach of the covenants contained in the lease
If a tenant has agreed to lease a commercial property for a set period of time, then they are bound to continue. If they no longer want to occupy, then the lease may allow for them to find a new tenant to sublet to. There are generally restrictions and conditions in respect of this and it is important not to breach them. The tenant will still be personally liable for payment of rent, in the event that the subtenant defaults.
Licences to occupy
In contrast to a lease, a licence to occupy premises does not give the occupier any proprietorial rights and it cannot be assigned to anyone else. If the property changes hand, the licence will be at an end. A licence does not give any security of tenure, so a licensee can be asked to leave at any point.
A licence to occupy is generally quicker and easier to agree than a lease and is often used as an interim measure to allow someone into a property while a full tenancy agreement is agreed upon.
It is important that a licence to occupy is carefully drafted however, as simply calling it a licence does not guarantee that a court will construe it as such. If the occupier can show that they have exclusive possession, then the agreement will be held to be a lease.
Commercial lease disputes
A commercial lease dispute can be time-consuming and damaging to both landlord and tenant. Commercial leases are a complex area of law with wide scope for misunderstanding and disagreement.
It is important to seek legal advice as soon as possible if a dispute arises, to try to resolve the matter before it escalates and positions become entrenched.
A skilled commercial property solicitor will be able to suggest ways in which agreement can be reached to the satisfaction of both parties and without the need for litigation, which is generally a lengthy and expensive process.
At Stephen Rimmer, our commercial property team are experienced negotiators with an excellent track record of success in resolving disputes without recourse to the courts. However, should court proceedings be required, we can ensure you have the very best representation.
Our commercial lease advice fees
We understand the importance of budgeting when it comes to dealing with legal matters which is why we strive to keep our pricing competitive while maintaining the highest standards of expert advice and client service.
For drafting commercial leases or licences to occupy, we are generally able to offer fixed fees. This means that a price will be agreed in advance of the work being completed, allowing you to plan accordingly.
Where this is not possible, potentially due to the complexity of the work, we will inform you of the hourly rates of the commercial lease solicitor we expect to work on your case. This will give you a realistic idea of your likely overall costs.
Find out more about our hourly rates and the way we charge for our work.
Commercial lease and licence to occupy FAQs
What is a landlord responsible for in a commercial lease?
The landlord will be responsible for repairs and maintenance and ensuring the property is safe, to include gas, fire and electrical safety checks.
They will also usually arrange and pay for buildings insurance. The landlord’s costs will be recouped via service charges.
The lease will specify exactly what obligations the landlord has and what has been passed on to the tenant.
What rights does a commercial tenant have?
A commercial tenant will have security of tenure where this has not been specifically excluded in the lease. Other rights will be detailed in the lease.
What happens when a commercial lease expires?
If the tenant has security of tenure, then they have the right to renew a commercial lease. Alternatively, they may wish to vacate the property, in which case they can leave on the end date of the lease.
How can you get out of a commercial lease early?
If a commercial lease contains a break clause, then either party can invoke this by following the notice procedure set out in the clause.
If not, then the parties will be restricted, as above.
What is the difference between tenancy and licence to occupy?
A licence to occupy is simply permission to be in a property temporarily, without being guilty of trespass. A tenancy gives some proprietorial rights to the tenant. This is evident by the payment of rent for a tenancy of an agreed period of time which grants exclusive possession of the property.
Speak to our commercial lease solicitors in Eastbourne and Hastings
Commercial property law is a complicated subject and the results of making an error can be serious. Legal advice is recommended before entering into or agreeing upon any occupation, tenancy or licence so that a proper legal foundation can be put in place.
From our offices in Eastbourne and Hastings, our commercial property law solicitors work with clients all across East Sussex, including in Bexhill-on-Sea, Hailsham, Polegate, Battle, Pevensey and St Leonards-on-Sea.
For advice and guidance in respect of commercial leases and licences to occupy, please contact our expert team now: