Taking your first business premises is a big step. Here are the essential things to check before you sign a commercial lease in England and Wales.
A first commercial lease checklist can save a business from costly mistakes before it takes possession of its first shop, office, warehouse, restaurant or other commercial premises.
The excitement of securing new premises can make it tempting to focus on location and headline rent and sign quickly. But a commercial lease can create obligations lasting several years.
Rent may only be part of the cost. Repairs, service charges, insurance, rent reviews, dilapidations and restrictions on leaving the property can materially change whether the premises are affordable. Before signing, work through these 30 questions. For support at any stage, speak to our commercial lease solicitors for business tenants.
Before signing your first commercial lease, check the property, rent, total occupation costs, lease length, break rights, repairs, permitted use, service charges, insurance and exit options. You should also establish whether statutory renewal rights apply and whether tax, registration or other post-completion requirements arise. Here is the full checklist.
Check the postal address, lease plan, boundaries, parking spaces, storage areas and any other land included. Do not assume that an area you viewed automatically forms part of the lease.
Your solicitor should investigate the landlord's title and identify relevant restrictions, mortgages, superior leases, easements and other matters affecting the property. Read more about our commercial lease due diligence work.
Check your rights to use roads, entrances, loading areas, shared corridors, lifts, parking and bin stores.
Check both the lease's permitted use clause and relevant planning requirements. A landlord agreeing to your lease does not automatically mean every proposed business activity is permitted.
Consider whether the lease term matches your business plans. A ten-year lease may provide security but could become a burden if your business needs to relocate after three years.
A break clause may allow you to leave before the contractual expiry date. Check the break date, notice period, who can exercise it and any conditions attached. For guidance, speak to our commercial lease break clause solicitors.
Confirm the annual rent, payment dates, whether payment is monthly or quarterly, whether VAT is added and whether there is a rent-free period.
Do not simply ask when the next rent review happens. Understand how the new rent will be calculated and whether the mechanism involves open-market rent, indexation, fixed increases or another formula. See how commercial rent reviews work.
Commercial property rent can be subject to VAT where the relevant tax treatment applies. If your business cannot recover all its VAT, this can materially increase occupation costs.
Ask for the current service charge budget, previous years' expenditure, planned major works and any service charge cap. Do not treat the quoted annual rent as the total cost. Learn about rent and service charge advice.
Commercial leases commonly require the landlord to insure the building and recover the premium from tenants. Check exactly what you contribute and what risks are covered.
This can be one of the most financially important provisions. Establish whether responsibility includes the interior, exterior, structure, roof, windows and services. GOV.UK sets out the basics in its guide to renting a business property and tenant responsibilities. Read our repair liabilities advice.
A Full Repairing and Insuring lease, commonly called an FRI lease, can place extensive repairing liabilities on the tenant. Understand these obligations before signing.
If the property is already in poor condition, consider negotiating a photographic Schedule of Condition. This can help limit repairing obligations where the lease is drafted appropriately.
Dilapidations claims can arise where a tenant has failed to comply with repairing, decorating or reinstatement obligations. Consider the potential exit cost at the beginning, not just at the end. Read about dilapidations claims.
Check whether you can install partitions, fit signage, change flooring, install equipment, alter services or carry out structural works. Landlord consent may be required.
Where consent is required for works, the landlord may require a formal Licence for Alterations. Factor both time and professional fees into your fit-out programme.
Retailers, restaurants and customer-facing businesses should check signage rights before completion. The lease, planning rules and advertising controls may all be relevant.
Shopping centres, estates and multi-let developments may impose trading-hour requirements. Make sure they work with your business model.
Assignment allows the lease to be transferred to another tenant, normally subject to conditions and landlord consent. This can provide an important exit route. Read our guide to assigning a commercial lease.
Check whether you can sublet the whole property, part of the property or individual rooms. A prohibition on sharing occupation can restrict future flexibility.
Even where businesses are connected, occupation by another company can breach a lease if sharing is prohibited. Check this before planning group-company occupation.
A landlord may ask directors to personally guarantee the tenant company's liabilities. This can expose personal assets if the company fails to meet its obligations. Take the guarantee seriously.
Check the deposit amount, when it can be used, when it must be topped up, when it will be returned and whether interest is payable. A separate rent deposit deed may be required.
Qualifying business tenants may have renewal rights under Part II of the Landlord and Tenant Act 1954. This is called security of tenure. You can read the full text of the Landlord and Tenant Act 1954 on legislation.gov.uk, and learn about business tenant security of tenure.
A landlord may require the tenancy to be excluded from statutory renewal protection. If validly contracted out, you should not assume you can remain after the contractual term ends.
Check what happens following fire, flooding or another insured event.
For commercial property in England, Stamp Duty Land Tax may arise. HMRC explains the position in its guidance on Stamp Duty Land Tax on leasehold purchases. For property in Wales, Land Transaction Tax applies instead under the Welsh Revenue Authority. Your liability should be checked before completion.
Certain leases require registration. As a broad rule, a newly granted lease for more than seven years will commonly require registration, although the exact position depends on the transaction. HM Land Registry explains the requirements in its Practice Guide 25 on leases and when to register.
Before signing, calculate more than the rent.
| Cost | Checked? |
|---|---|
| Rent | ☐ |
| VAT | ☐ |
| Service charge | ☐ |
| Business rates | ☐ |
| Insurance contribution | ☐ |
| Utilities | ☐ |
| Repairs | ☐ |
| Fit-out costs | ☐ |
| Rent deposit | ☐ |
| SDLT or LTT | ☐ |
| Legal and professional fees | ☐ |
| Future dilapidations exposure | ☐ |
A property with lower rent can sometimes become the more expensive option once these liabilities are included.
First-time commercial tenants commonly focus on rent while overlooking repairing liability, service charges, break-clause conditions and their ability to transfer the lease. Another significant mistake is agreeing Heads of Terms without understanding how those commercial terms will affect the eventual lease.
Many of these problems can be avoided by getting advice on commercial lease Heads of Terms early, before terms are treated as agreed.
Ask your commercial lease solicitor to explain anything that can increase your cost, restrict your business or make it difficult to leave. Legal reports are most useful when you understand the practical commercial consequences of the clauses.
A careful commercial lease review before signing can highlight risks while there is still time to negotiate them.
A first commercial lease checklist should help you look beyond the excitement of finding new business premises.
The question is not simply "Can I afford the rent?" It is "What will this property really cost me, what responsibilities am I accepting, and how easily can I leave if my business circumstances change?"
Checking these 30 points before signing can expose problems while there is still time to negotiate them.
If you are still wondering whether to get a lawyer involved, our guide on why use a solicitor for your first commercial lease sets out exactly when legal advice is worth the cost.
Our commercial lease solicitors advise business tenants throughout England and Wales on first commercial leases, lease reviews, Heads of Terms, FRI leases, repairing obligations, Schedules of Condition, break clauses, rent reviews, service charges, assignment and subletting, security of tenure and lease registration.
Taking your first business premises is an important step. Contact us before signing so you understand exactly what you are agreeing to and can negotiate from an informed position.
Legal note: This article is for general information only and does not constitute legal advice.
Last legally reviewed: 1 September 2026.