Commercial lease agreements and disputes

It is important to get your lease agreement exactly as you want it to begin with, and to know where you stand legally with any active contracts.

For both property owners and tenants, an experienced commercial property lawyer can be an important part of drawing up leases, to ensure everything is agreed upon and legally sound.

What are the most common reasons for disputes over commercial leases?

The most common subjects of commercial lease disputes are rent arrears, dilapidations, service charges, lease renewals and rent reviews:

  • Rent arrears
    The lease may permit forfeiture, where a landlord takes back the property, after 21 days of the rent being due. The lease may even give the landlord the power to send in the bailiffs and seize possessions.
    If rent cannot be paid, the landlord should be contacted beforehand to see if they are willing to negotiate an agreement. This may involve allowing monthly, rather than quarterly payments, for example
  • Dilapidations
    Repairing covenants in commercial leases usually state that the tenant is to keep the property, or specific parts of it, in good repair. For a commercial tenant, it is wise to understand the full extent of any obligations from the start of the lease.
    Be aware that obligations with regard to dilapidations are ongoing, and do not just apply at the end of the lease.
  • Service charges
    Service charges can lead to dispute. If a bill for service charges that are not expressly stated in the lease is received, it might be that the tenant seeks legal advice.
    The laws covering service charges are very stringent. A landlord is obliged to consult with a tenant on this subject. In fact, failure to consult on service charges may mean the tenant doesn’t have to pay them.
  • Lease renewals
    In line with the Landlord & Tenant Act 1954, leases will continue beyond their expiry date until they are brought to an end either by the tenant or the landlord. If a tenant wishes to bring a lease to an end or renew it, they likely must give notice six months prior to the date on the lease (statutory notice). Similarly, a landlord is required to give notice of their intention not to renew.
  • Rent reviews
    Lease renewal disputes can relate to the terms of a new lease and an associated rent hike. On long leases, rent reviews will usually occur once every five years. In addition, they will almost always go up and never down in line with market value.

I would like legal advice over the terms of my commercial lease – where should I go?

Your first port of call should be to contact a legal professional who can help ensure you know your rights and advise on whether you should take legal action. The specialist property solicitors at First4Lawyers can provide all the support and advice you need. Call us or use the Request a Callback form at the top of your screen.

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