Want to lease a premises for your business?

If you’re thinking of leasing a premises for your business here are 8 key issues to consider before signing up to a commercial lease:-

1. Rent:-

Is the rent a fixed amount or a percentage of turnover?

When does the rent fall due? Monthly, quarterly?

Will VAT be payable in addition to the rent?

Will there be a rent free period?

How much is the deposit?

Will you have to provide a guarantee for rent, rates & service charges?

2. Break clause:-

Is there a break clause to allow you to terminate the lease early?  If so, the break clause criteria can often be very strict particularly in relation to the notice periods required in order to invoke the break clause.

3. The term of the lease:-

How long will your lease be?  Will you acquire statutory rights?

4. Repairs:-

Who is responsible for repairs – the landlord or the tenant?  If the less exceeds a term of 5 years it is most likely that you as tenant will be responsible for all of the repairs.  However, if the lease is for a term of less than 5 years it is likely that the tenant will only be responsible for internal repairs.  Is the building new or old?  This could be significant in relation to your obligations as a tenant to undertake repairs.

5. Insurance:-

If you are signing a Full Repairing and Insuring lease then you, as tenant, will have to pay the insurance premium for the premises with the policy being held in your landlord’s name as the owner of the property.  If the premises has a number of units with multiple tenants your obligation will be to pay a proportion of the total premium.  You should make enquiries regarding the level of cover required.  Separately, you will also have your own insurance to cover such areas as employer’s liability and public liability.

6. Service charges:-

These may or may not arise depending on the nature of the premises you intend leasing.  However, if service charges are applicable enquiries should be made as to the extent of the service charges and what services are included.

7. Rent reviews:-

Depending on the terms of your lease, rent reviews may or may not arise.  What are the terms of any rent review?  Upwards only rent reviews are no longer permitted in relation to new leases.  Often times rent reviews will occur every 5 years and the terms of the rent review should be set out clearly in the lease and given careful consideration.

8. Stamp Duty and VAT

As tenant you will be liable for stamp duty on the lease.  The landlord can also charge VAT so this should be clarified in advance of signing the lease.

If you are considering renting a commercial premises we would be happy to prepare a quote for you in respect of our professional fees and to answer any queries you may have.  For further information or advice please do not hesitate to contact us on 021 489 7256 or by email at info@douglaslawsolicitors.ie