How property leases work
A property lease is an agreement between you and your landlord allowing you to use the premises. The lease will usually be in writing and covers the rent, space occupied, the length of the lease, your obligations and rights and those of your landlord. Leases tend to be complex documents, which is why it's important to get a basic understanding of how they work. This guide outlines the key areas of the lease, hidden costs to look out for and the importance of getting professional help.
- What a lease covers
- Hidden costs
- Get professional help
What a lease covers
The lease should cover the following areas:
- Your rent and how much it could go up to over the length of the lease.
- The length of the lease.
- Any get out clauses. For example, if you hit financial difficulties will your landlord agree to let you give up the lease before the expiry date. Alternatively, will they let you transfer the premises to somebody else?
- Are you expected to provide a guarantee?. Small and new businesses are likely to be asked to provide a rent guarantee to prove they can meet the rental costs. Watch out for this, in most instances, a bank guarantee will be fine, however, some landlords may want a cash deposit or they may insist on taking a charge on director's personal property.
- Find out what happens when the lease ends. Do you have the right to renew the lease - if you're running a shop or restaurant this is a very important consideration, as changing location could have a bit impact on your business.
Dig into the small print and get answers to the following questions:
- What's included in the service charge? In addition to your rent, you may also have to pay a service charge, which typically covers services such as cleaning, heating and lighting. Find out exactly what's covered in this charge and how the costs are calculated.
- Who is paying for insurance? Do you have to insure the property yourself, or do you have to pay for your landlord's insurance, are these costs covered in your service charge?
- Who pays for repairs? Does the landlord expect you to carry out repairs, or to cover the cost of repairs he carries out? Does the lease say you have to leave the premises in a certain state of repair, even if it's currently in a poor condition?
Get professional help
Property leases can be complex legal documents written in an arcane language, which is why you should employ experts (a solicitor and maybe a surveyor) to help you weed out any clauses that are unfair or need further clarification.
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