As a commercial landlord or tenant, when you enter a commercial lease, an important aspect to negotiate is rent.\u00a0Commercial leases are legally binding contracts, so the rent provision in a lease agreement is very significant.\u00a0Therefore, both parties must be content with what they agree on. However, when negotiating rent for commercial property, it is not solely about deciding the rental amount but also the type of rent for the commercial lease.\u00a0This article will explain why a commercial tenant and landlord might choose a pure turnover rent in a UK commercial lease.\u00a0<\/p>\n\n\n\n
Turnover rent<\/a> is where a commercial tenant pays part or all of their rent in proportion to the gross turnover of their business.\u00a0This means that rather than paying an agreed-upon specific amount of rent regularly, the rent may vary depending on the business turnover.\u00a0<\/p>\n\n\n\n Turnover rent<\/a> can include two parts to the rent.\u00a0One part is the turnover part, and the other is the base rent.\u00a0 The base rent will be a regular agreed amount, usually at a reduced level from market rate rent.\u00a0The second part will be a percentage of the turnover.<\/p>\n\n\n\n A pure turnover rent, however, is where the rent is all related to the turnover of the tenant’s business. Therefore, there is no base rent, and the whole rent continuously varies depending on the progress of the tenant\u2019s business. A pure turnover rent is usually around 10% of the tenant’s annual turnover.\u00a0<\/p>\n\n\n\n During the recent pandemic, leases with turnover rent became more common for commercial properties. Similarly, pure turnover rent also became more popular. <\/p>\n\n\n\n We will explore why a commercial tenant and landlord may choose a pure turnover rent for a lease below. <\/p>\n\n\n\n\n\n Continue reading this article below the form\n <\/i>\n<\/a>\nWhy Utilise Pure Turnover Rent? <\/h2>\n\n\n\n