Reviewing a commercial lease before signing

A commercial lease review should show how the proposed premises will support the business and what obligations remain if trading changes. Government guidance distinguishes responsibilities imposed by law from those allocated in the lease. ^[1]

Read the lease against the operating plan

Describe the business, staffing, opening hours, equipment, deliveries and planned fit-out. Check whether the premises definition includes the areas actually needed: storage, loading space, parking and shared facilities can be critical to daily operation.

Identify the full occupancy cost, including rent, insurance contributions, service charges, rates and repair exposure. A rent-free period may not suspend those other payments.

Test growth and closure scenarios

Ask what happens if the business needs more space, sells its assets or stops trading before the lease ends. Review transfer restrictions and exit rights together with any director's guarantee.

Break clauses and assignment provisions deserve attention before signing. Ask the adviser to flag unresolved commercial choices rather than simply confirming that the document is legally recognisable. Keep the agreed heads of terms beside the final draft to spot changes introduced during negotiation.

Describe a working day in the proposed premises Walk through the activities the business must perform from opening to closing. Identify how staff enter, where stock arrives, where waste waits for collection and which facilities customers use. Compare those activities with the demise, rights and permitted use in the draft lease. An attractive unit can be unsuitable if essential loading space is outside the letting or access ends before the business closes. Give the adviser a factual operating description so they can identify the clauses that determine whether the premises will function as intended.

Include equipment and services that are central to the operation. A clinic may need particular ventilation and private access; a workshop may depend on power capacity and extraction; an office may require reliable data connections. Ask which issues need a surveyor, engineer, planning adviser or specialist contractor. The solicitor can examine legal rights and obligations, but a lease describing electricity does not establish that the supply meets your equipment's requirements. Resolve technical and legal dependencies together before assuming that ordinary fit-out work will make the unit suitable. ## Separate opening incentives from the continuing commitment Build a financial picture covering more than the first months. Distinguish base rent, VAT where applicable, service charges, insurance payments, rates and the work needed to begin trading. Ask precisely which payments are suspended during any incentive period and when each starts. If the landlord contributes to fit-out, identify the conditions for receiving the contribution and the evidence required. A concession can have substantial value while still leaving the tenant responsible for other costs before the business earns revenue from the premises.

Consider the cost of maintaining the property through the term and returning it at the end. Government guidance explains that repair responsibilities need to be examined in the lease and that moving out can involve dilapidations obligations. ^[1] Ask a surveyor to assess significant physical exposure and have the solicitor explain any negotiated limits. The affordability decision should include foreseeable liabilities arising from the building and the contract, rather than compare the rent alone with the business's expected monthly income. ## Test events that could change the business plan Consider what happens if the business grows, changes its trading model or sells to another operator. Ask whether assignment, subletting, sharing or a change of use would require consent and what restrictions apply. A future purchaser may value the business differently if occupation cannot readily transfer. If the business operates through a company, identify any personal or group guarantee alongside the tenant's obligations. Those additional commitments can outlast the commercial circumstances that made the lease attractive at the outset.

Also discuss a downside scenario in which trading stops before the contractual term ends. Identify any break opportunity, the conditions for using it and the commitments that could remain after departure. Do not assume closing the company or handing back keys releases every obligation. The review should give decision-makers a realistic account of the available exit routes and their dependencies. If a particular exit date is essential to the business plan, ensure the commercial negotiation addresses that requirement before the detailed lease is finalised. ## Turn the legal report into decisions before signing Ask the adviser to distinguish agreed terms, unresolved points and matters requiring a commercial decision from the business. Compare the final draft with the heads of terms, side letters and fit-out arrangements. Where wording has changed, ask what practical consequence follows. A report that identifies a risk may require a decision to negotiate, obtain further evidence or accept the exposure. Make that decision deliberately and ensure the people authorised to commit the business understand the significant obligations they are approving.

Before execution, confirm the correct tenant entity, guarantors, plans and accompanying documents. Arrange how the signed lease and key obligations will be handed to the people managing the premises. Payment dates, consent procedures and notice requirements should not remain known only to the person who negotiated the deal. A concise operational record can sit alongside the full legal documents, showing where the authoritative terms are found. This makes the review useful throughout occupation, when staff need to act on the agreement rather than simply know that legal advice was obtained.