Factors to consider when negotiating a commercial lease

On Behalf of | May 3, 2024 | Business Law

While buying a commercial property is an option, many business owners opt to lease their premises. This has the advantage of business owners not having to part with too much cash, particularly in the early stages of the business. 

A commercial lease can be advantageous for all parties, as long as the negotiations are productive. What factors should you consider while negotiating a commercial lease?

Will rent increase? 

Firstly, you will need to negotiate a rent amount with the landlord. Generally, this is paid on a month-to-month basis. However, you’ll also need to consider whether or not there are any clauses for rent increases. For example, the landlord may want to increase the rent every few years. Or, rent amounts may increase if your business makes higher profits. 

All parties should be happy with these terms and it’s important that you don’t get locked into an agreement that no longer represents value for money. 

Who carries out repairs? 

Generally, it will be up to the tenant to maintain the general condition of the building that they are using. Nonetheless, there may be some exceptions. Issues with utilities, such as water supply, heating and electricity may be the responsibility of the landlord and their insurance company. 

It is vital that the lease agreement sets out which party is responsible for certain repairs as well as what state the building should be left in once the lease comes to an end. 

Is subletting an option? 

Sometimes, a business owner takes on a commercial lease only to realize that the company does not require as much space as the building offers. Subletting parts of the property may be a possibility, but this has to be cleared with the landlord and included in the commercial lease agreement.

To ensure that you enter into a lease that benefits you, it will be helpful to obtain legal guidance.  


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