BUSINESS INFORMATION
Negotiating a lease
You have an opportunity to negotiate with the landlord or agent before entering a lease, to ensure it meets your needs.
Before signing a lease, you have the opportunity to negotiate terms with the landlord or their agent to align with your business needs.
Key leasing matters should be carefully considered prior to starting negotiations to avoid future complications.
Seeking financial, legal, and business advice is crucial to fully understand your rights, liabilities, and obligations before finalizing a lease agreement.
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What can I negotiate?
Almost all aspects of a lease can be negotiated, including rent, lease terms, renewal options, and operating expenses. Negotiating often involves multiple discussions, so it’s important to allocate enough time to reach an agreement. Avoid signing a lease under pressure and seek professional legal, business, and financial advice first.
Leases are typically drafted by the landlord’s solicitor and are tailored to meet the landlord’s preferences. The extent of negotiable terms may depend on factors such as:
- Demand or competition for the premises.
- The landlord’s financial requirements.
- Your appeal as a tenant, including your ability to meet lease obligations or your potential to bring clients or other tenants to the area.
- The landlord’s long-term plans for the property.
Before entering lease negotiations, assess your financial capacity to determine what you can afford and review the lease terms to establish your acceptable boundaries. Consider hiring a professional experienced in business leasing to assist, especially if face-to-face negotiations aren’t your strength.
Before entering lease negotiations, assess your financial capacity to determine what you can afford and review the lease terms to establish your acceptable boundaries. Consider hiring a professional experienced in business leasing to assist, especially if face-to-face negotiations aren’t your strength.
Effective lease negotiation is crucial to your business’s success. Key tips include:
- Know your financial limits but avoid disclosing this to the landlord or their agent.
- Stay objective and don’t let emotions drive your decisions.
- Take your time to thoroughly evaluate the lease terms and identify acceptable or non-negotiable points.
- Seek expert advice from legal, financial, and business professionals regarding the lease terms.
- Document all agreements to ensure that any verbal assurances are recorded in writing.
- Be ready to walk away if the terms don’t align with your business goals.
Ensure the landlord or agent is aware that all negotiations are provisional and subject to approval from your legal and financial advisers.
Terms and conditions of a lease
The terms and conditions of your lease play a significant role in ensuring the stability and success of your business. Establishing appropriate terms from the outset can help avoid potential challenges in the future.
Key considerations for lease terms and conditions:
- Security of tenure for the duration you require.
- A rent structure that remains affordable throughout the lease.
- Clauses that do not disrupt daily operations or impose unreasonable financial obligations.
- Provisions allowing you to run a profitable business.
- Protection from competition, particularly crucial in shopping centres or clusters of shops owned by the same landlord.
For more detailed insights, refer to How to Negotiate Your Way to a Better Retail Lease.
Main issues to consider
Key terms and conditions commonly included in a lease are
- Lease duration (term) and renewal options
- Rent and rent reviews
- Permitted use of the premises
- Tenancy mix and competition
- Fixtures and fit-out requirements
- Costs involved
- Repair and maintenance responsibilities
- Assignment and sub-leasing provisions
- Defaults and breaches
- Redevelopment and relocation terms
- Termination clauses
For detailed guidance on each of these topics, refer to our Understanding Commercial Leases section. Ensure you are well-informed about these matters before entering negotiations.
SMALL BUSINESS HELPLINE
Need more information about leasing?
Our commercial tenancy advisers at DCK Enterprise are available to address your queries or concerns.
- Call us on 133 140
- Book an appointment: Schedule an online or phone consultation with our experts.
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