Negotiating a business lease with your landlord

20 July 2012
Negotiating a business lease with your landlord

What sort of rights does a tenant of a restaurant, café, catering or hotel need when entering into a lease? Legal expert Debra Kent explains

I'm looking to negotiate my lease but what kind of terms and rights will I need to properly operate my business?

The specific rights you need in your lease should be negotiated with your landlord as the law is not always able to help you out if you get it wrong.

Access rights A fundamental right you will need is for proper access to your property from the public highway or over private land. You may need rights with or without vehicles, particularly delivery vans and lorries, as well as pedestrian rights for your guests, staff and other visitors.

Conveniences If you are leasing part of a building and there are shared toilets and other facilities, you must ensure you have the necessary rights to use these and to agree who is responsible for providing hot and cold water, paper, etc.

Do you need exclusive rights to bathrooms and other facilities? Your guests might not like sharing these facilities with other tenants.

Signage Most leases will include restrictions on external signage and alterations. This may be very important as you will want to display your business name.

It is best to negotiate broad rights of signage, but most landlords will want to control the size, location and other aspects of your signs. This is particularly true if you lease part of a building.

Rights to change your signage without necessary consents would be useful, particularly if you own a chain of units and might want to upgrade your brand.

Air conditioning and extractor fans It is imperative to ensure you comply with health and safety and anti-nuisance legislation, that the property is at the right temperature and any unpleasant smells are properly extracted. This often requires specific rights from the landlord (and possibly neighbouring owners) to install plant and equipment outside the property, possibly on the roof, as well as easements for pipes and drains. Structural alterations may also be required as you might need to drill holes in external walls.

Many of these items will also need planning permission and possibly other consents.

Services It is fairly basic, but there is a need for the right of passage of water and sewage, as well as the supply of electricity, gas, telecommunications, data and other services or supplies which might be consumed at the property through any shared conduits.

Car parking Your staff might need a place to park, and you will need to consider whether your guests will be able to park nearby. It could be that you are in a city or a busy area and car parking rights are not available, but this is worth considering.

Support If your unit is part of a larger building or is in a terrace then it is usual to try and obtain a right of support, shelter and protection for your property.

Naming rights If you are taking most or all of a building then you might want to have the right to name your property, not just your business, and to erect signage relating to that name.

Consider the following:
How do people access your business?
â- What exactly do you need to do or use outside the property?
â- Is there any additional plant, equipment, drains, pipes and signage that you need to place at the property?
â- Will customers know where to go or are directional signs needed?
â- Do you need rights of access to maintain these items?

If you do not have all necessary rights and, for example, need to install additional air conditioning or extractor fans, then you will need to seek the landlord's consent. Depending upon the extent of the land and buildings in your lease and the necessary rights, you might find that the landlord can refuse to give you consent or even that you need the consent of an adjoining land owner.

Not sorting these matters out when you are establishing your business, or purchasing an existing lease, might have significant adverse consequences for you later.

Debra Kent is a partner at Charles Russell LLP

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