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Whether a commercial landlord or a commercial tenant, you will have rights when part of a commercial property lease. These will usually be in your commercial lease agreement for your new lease. It is essential that these reflect your needs in the commercial lease and business premises and that you respect the other party’s rights in the leased property. If you do not adhere to rights and obligations in a commercial lease, it can breach the lease. This article will detail the common rights of a landlord in a commercial lease in the UK.
Commercial Lease
A commercial lease is where a property owner allows a business owner to copy their property as their commercial premises. The property owner or landlord will permit their commercial tenant to carry out a specific business activity within the property, and in return, the tenant will pay rent.
A commercial lease agreement will govern the commercial lease. This is a legally binding contract that details the rights and obligations of both parties to the lease. For example, it will describe the following:
- the lease term;
- the rent amount;
- repair and maintenance rights;
- any rent review clause; and
- termination rights.
Landlord’s Rights
The rights a landlord has in a commercial lease are “reservations”. These are the rights in a commercial lease relating to the retail premises that the landlord reserves as theirs. They arise from the presence of the lease rather than existing before a landlord grants a lease.
Some landlords’ reservations in a commercial lease may be pretty reasonable, but others are more demanding on the tenant’s occupation of the premises. Let us explore some common landlord rights in a commercial lease below.
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Right of Entry
It is common for a commercial landlord to reserve the right to enter the property with reasonable notice and at a reasonable time. However, reasonable notice is not necessary when an emergency occurs.
Repairs, Alterations and Replacement
It is reasonable for a commercial landlord to have the right to carry out repairs and alterations in their commercial property. This includes the replacement of conduits such as pipes and cables.
However, a commercial lease may also permit the landlord to install additional conduits in the premises and around areas with relevant machinery and plants. If a commercial lease grants a landlord the right to install these, they should ensure it does not disrupt tenants too much or reduce the area they enjoy on the premises.
Installations
A commercial landlord may have a right in a commercial lease to install items outside the commercial premises. This is particularly relevant to retail premises. This may be to allow for the following:
- signs which direct people;
- lighting; and
- security cameras.
However, even where a commercial landlord does have a right to install items on the outside of their commercial property, it is essential to ensure that this does not influence a tenant’s rights. This may relate to the following examples:
- their signages;
- their shop front and display;
- access to the commercial premises;
- their shop window; and
- their competition, such as advertising a competitor nearby.
Closure of Common Parts
Some commercial leases may reserve the commercial landlord the right to close common parts of the commercial property. This may allow them to do so:
- permanently;
- temporarily; or
- by redirecting these.
You should be aware that where a commercial lease grants a landlord this right, they should offer a:
- reasonable alternative; and
- not unnecessarily affect access to the premises.
Carry Out Works
It is common for commercial leases to grant a commercial landlord the right to carry out works on commercial property. This can include their right to develop a neighbouring property to the commercial premises. This can consist of the right to erect scaffolding as long as this does not affect access to or use of the premises.
This cheat sheet outlines what you should be aware of in your lease agreement.
Where commercial leases do prescribe these rights to the commercial landlord, they should not be so onerous that they either:
- prevent a tenant from seeking compensation where the work disturbs the tenant’s enjoyment; and
- do not provide additional protections to the tenant’s trade, particularly for retail and restaurant premises where the effect can be very detrimental.
Light
Commercial landlords often reserve the right to light the land they own. This stops commercial tenants from building where it would affect this.
Key Takeaways
Commercial landlords will have rights in commercial leases. These are reservations as they reserve rights which arise as part of the existence of the lease. Whilst the landlord’s rights may vary across leases, there are some common rights landlords enjoy in commercial leases, and we have detailed some of these in this article. For example, the right to light can prevent a tenant from building on the land and the right to close common areas.
A commercial landlord may also reserve the right to work on the property, but they should ensure they provide additional protections for the tenant, particularly if they are a retail or restaurant business.
If you need help understanding the common rights of a commercial landlord in a commercial 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. Call us today on 0808 196 8584 or visit our membership page.
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