A lease term varies between leases, and it can be difficult for commercial tenants to decide whether a long or short-term lease is better when you enter a commercial agreement. However, it is a crucial decision as the wrong one can have inconveniencing consequences. In addition, a commercial lease is a significant legal responsibility as a commercial tenant, so you must select a term which suits your circumstances. This article will explain why commercial tenants in the UK might prefer a short lease term.<\/p>\n\n\n\n
A commercial lease grants you the right to occupy your landlord\u2019s property for your business premises. You occupy the premises for a specific business purpose they permit on their commercial premises, and in return, you pay your landlord rental payments. The terms and conditions of a commercial lease are in the commercial lease agreement, which is a legally binding contract between you and your commercial landlord. One of the terms in a commercial lease agreement is the term.<\/p>\n\n\n\n
Short-term leases are very popular in commercial property leases nowadays. There are reasons why short lease terms are standard in commercial leases. We explore some more below.<\/p>\n\n\n\n
A lease term can range from as little as 1 day to 999 years, although a commercial lease usually has a lease term of 1 to 25 years.<\/p>\n<\/div>\n\n\n\n
A likely reason why you, as a commercial tenant, may choose a short lease term for your commercial lease is that this comes with less stamp duty to pay. You calculate stamp duty by multiplying your rent\u2019s cost by the years the commercial lease lasts. So, a short term generates less.<\/p>\n\n\n\n
If you run an SME as a commercial tenant and wish to enter a commercial lease to occupy a property for your business purposes, a short term may suit you. This is because SMEs have the potential to grow in their early years, so they may not want to stay in commercial premises for too long. In addition to physical growth, an SME may rely on market fluctuations, so it may wish to move geographical locations frequently. <\/p>\n\n\n\n
A short term provides flexibility and means your business can move on sooner; it will reach the lease end in less time than a long-term commercial lease. <\/p>\n\n\n\n
A commercial lease agreement is a legally binding contract between you and your landlord which includes terms with financial costs such as:<\/p>\n\n\n\n
Therefore, if you are a commercial tenant with a low budget for your commercial premises, a short term may be a preference as, overall, you agree to a lower financial commitment than a commercial lease with a long term.<\/p>\n\n\n\n
A short term lease may suit you as a commercial tenant as it may mean less stress for your tenancy. This is because, as the lease is for the short term, you are less likely to find yourself in a position where you must sublease or assign it. To sublease is to create another lease as the underlease to your lease, where third parties shall become your tenants and lease some of your commercial space. On the other hand, when you assign your lease, you transfer it to another third party.\u00a0<\/p>\n\n\n\n
Commercial tenants prefer a short term as it will end sooner. When it does, you may wish to negotiate a new lease through a renewal. At this point, you can also negotiate new lease terms. You may want to suggest more beneficial ones to the original lease terms, such as:<\/p>\n\n\n\n