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When you enter a new lease for your commercial property, what you include in the lease agreement can depend on the type of business that occupies your property. It can also depend on the length of the commercial property lease, whether it is a short-term or long-term commercial lease. The lease term end date in the lease agreement will determine this. Including the right content in your lease agreement in terms of clauses and provisions is essential. A lease is a legally binding contract that must protect you and be workable for your business tenant. This article will explain three important areas a commercial landlord should include in a short-term shop lease for a commercial building in the UK.
1. Prohibition Of Dealings
When you lease your commercial property as a short-term shop lease, one important area to consider is the prohibition of dealings. This refers to where your commercial tenant may want to share the business premises with other companies. It covers issues you might expect to see under alienation clauses in a commercial lease.
As you have a short-term shop lease, in the prohibition of dealings section in your retail lease agreement, it is advisable to state the following prohibitions on your tenant:
- assigning the lease or any part of the property, including the benefits or burdens of the lease;
- underletting the lease or any part of the property;
- charging the lease or any part of the property;
- the passing of the lease or any part of the properties, including the benefits or burdens of the lease;
- sharing of the lease or any part of the property, including the benefits or burdens of the lease;
- allow any third party any right or licence over the commercial property; and
- unless there is joint ownership, holding the lease or trust for another.
2. Alterations and Signs
When your commercial tenant is a business owner running a shop, alterations and signage are significant. You likely will not want a short-term tenant to make any significant alterations as they will not be on the property for long.
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However, a shopkeeper may need permission to perform some basic actions in this area. For example, you may wish to prohibit your tenant from making any alterations except for installing and removing non-structural shop fittings, which can potentially be dismantled provided they:
- remove these before the lease terminates; and
- makes good of any damage they may cause to your commercial property.
You may also wish only to allow your tenant to attach signage to the property, such as a poster or advertisement where it is visible from outside the property, if:
- you approve in terms of font design type and size; and
- the design and size suit the property’s nature and location.
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3. Repairs and Decoration
It is essential for any commercial lease agreement to include a clause about repairs and decoration of the business premises. This applies to short-term shop leases, too. The type of repair and decoration obligations that you may wish to include in your lease are:
- to ensure the shop premises are always clean and tidy;
- to clean the shop window on the inside and outside;
- to repair any damage your tenant or any person under their control causes to the property;
- where glass in the property is broken or cracked, they must replace it; and
- that you require them to redecorate to your satisfaction three months before the lease end term.
For a short-term commercial lease, it is not common to include a repair obligation to put the property in a better form of repair than when your tenant entered the commercial lease.
Key Takeaways
If you plan to enter a short-term shop lease in the UK, you must be aware of some of the lease terms to include in your lease. Lease obligations can vary depending on the type of commercial lease. This article has explained three important areas a commercial landlord should consider in a short-term shop lease. It explains that it is helpful to include a prohibition of dealings section in the lease, which will prevent your tenant, for example, from sharing the commercial space with others.
It also explains what you might include under signage and alterations in a short-term commercial lease. Finally, the article considers repairing and decorating provisions for a short-term shop lease. For example, it does not necessarily require the tenant to put the property in a better state of repair than it was at the start of the lease.
If you need help understanding important areas a commercial landlord should include in a short-term shop lease in the UK, LegalVision’s experienced leasing lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. So call us today on 0808 196 8584 or visit our membership page.
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