Negotiating a commercial lease renewal is a critical task for any business owner. The terms you agree to can significantly impact your business’s financial health, flexibility, and long-term success.

Review Your Current Lease

Begin the renewal process at least 6-12 months before your lease expires, it is highly likely that you need to serve notice on your landlord of your intention to renew the lease and the terms you are proposing.  This is often at least 6 months, but can be as much as 12 months, prior to the expiry of the lease and is a date that cannot be missed or you will lose your rights and be at the mercy of the landlord as to the terms of any new lease.

Starting the process early gives you ample time to ensure you know the timeline for serving notice, to engage a surveyor, research market conditions, evaluate alternative locations, and negotiate better terms.

Carefully review your current lease to understand what works and what isn’t. Identify any clauses that have caused issues or areas where you need more flexibility, such as subletting rights, renewal options, or maintenance responsibilities.  Consider whether your current space still meets your business’s needs.  If you need more or less space for your business, or if your business is changing, use this as an opportunity to negotiate the size and configuration of your demise (the leased area).

Research

Understand the current commercial market in your area.  Are rents increasing or decreasing? Are there any incentives being offered to new tenants? This information will give you leverage in negotiations with the landlord, enabling you to request better terms if the market is favourable to tenants at the time.

Identify Key Negotiation Points

Focus your efforts on key areas that can have the most impact on your business such as:

Rent – Negotiate the base rent and ensure that any increases are reasonable and in line with market trends.

Lease Term – Balance the security of a longer-term lease with the flexibility of a shorter one.

Maintenance and Repairs – ensure you know who is responsible for what and negotiate any necessary changes.

Break Clauses – look at the options for subletting or early termination if your business needs to change or evolve.

Your Value as a Tenant

If you’ve been a reliable tenant, paying rent on time, maintaining the property, and contributing to the property’s value a landlord would prefer to keep you, and you can use this to negotiate more favourable terms.

Hiring a Professional

If you need to serve notice or are unsure when you should be doing this instruct a lawyer to review your lease and confirm this for you.  If you’re not confident in your negotiation skills or the complexities of your lease, consider hiring a surveyor to assist you.  They can provide valuable assistance and help you secure the best possible terms.

Renewing a commercial lease has a significant impact on your business.  By starting early, doing your research, getting and negotiating strategically, you can secure a lease that supports your business’s growth and success.

If terms cannot be agreed with the landlord, and you have served notice correctly, you must commence legal proceedings to preserve your existing rights.  The court will determine the terms of the new lease.  In this situation be sure to instruct a property litigation lawyer as soon as possible to ensure that you do not miss the strict deadlines.

For any advice related to commercial lease renewals or any issues regarding property disputes do not hesitate to contact me on caroline.knowles-ley@cognitivelaw.co.uk or call on 01243 943203.

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