Four Useful Clauses for Landlords in Lease Agreements in the UK

If you are a commercial landlord with a commercial property, you likely lease space to business owners for them to run their businesses. You will form a new lease agreement with them which is a contract that governs their occupation in the commercial premises. It details your rights and obligations and is legally binding, so you must carry these out. Therefore, it is helpful to ensure the lease clauses reflect your intentions as the commercial landlord. This article will explain four useful clauses for landlords in lease agreements in the UK.

Rent Review Clause  

A rent review clause is a clause that you, as a commercial landlord, may want to include in your commercial lease agreement with your tenant. A rent review clause states that an assessment may take place for the rental amount of your commercial property periodically to ensure that it is an appropriate amount. There are various methods of rent review, such as the common open market rent review. 

If your review method is a market review, it is wise to include that this is only upward in your rent review clause. Methods based on percentages will generally always increase or stay the same, but if the review is anchored to the Retail Property Index, you may want to clarify that if the index does not move, the rent will stay the same. 

Advertisements and Signs  

Perhaps this is not a lease clause you first think of when you draw up a commercial lease. Nevertheless, including a clause in your lease agreement concerning advertisements and signs may benefit you as a commercial landlord. 

Your tenant will likely want to place a sign on the business premises to advertise their business, which is normal and not a concern, provided you can approve the location and design to ensure it is of good commercial quality. Ensuring tenants seek your approval for advertisements and other signage on the exterior is crucial as it affects how your property presents and may potentially cause damage to the exterior. 

Moreover, in particularly bad cases, the sign could disturb neighbouring tenants. If it does, as the landlord, you may need to take action to comply with your obligations. 

Repair Clause

It is becoming common practice for commercial landlords to ensure their commercial tenant is obligated to repair the commercial premises. Therefore, this is something you may wish to consider for the repair clause in your lease agreement. You may consider a repair clause that makes the lease a full repairing and insuring lease, which is an FRI lease.

A full repairing and insuring lease means that your commercial tenant has to pay all the costs for repairs and the insurance for the part of your property they occupy as their commercial premises. At the end of their lease term, this normally requires them to ensure that your property is in good and substantial repair and condition, which, depending on the property, will mean it will be in a ‘nearly new’ condition. Although you will typically be the one who takes out and arranges the insurance, you can pass the cost to them as an insurance rent clause. 

You should ensure the repair clause in your lease is clear, as this is a common cause of conflict between landlords and tenants. Also, whilst your tenant will have to pay for repairs, you can outline in the lease what you expect in terms of repair.

Pandemic Clause

You may hear people refer to this as a force majeure clause. During the COVID-19 pandemic, many business owners felt the commercial effects of the pandemic. Therefore, including a pandemic clause in your commercial lease agreement may be worthwhile. For example, a pandemic clause will stop your tenant from trading on your property when there are restrictions.

Key Takeaways

As a commercial landlord, you may find some lease clauses beneficial to include in your commercial lease agreement. For example, a clause that details permissions and restrictions on your commercial tenant regarding advertisements and signs. Likewise, a repair clause can benefit you and limit your repair responsibilities. 

If you need help understanding useful clauses for landlords in lease agreements in the UK, our 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. Call us today on 0808 196 8584 or visit our membership page.

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