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How to write a commercial tenancy agreement

two commercial shop spaces with flats above

You need a commercial tenancy agreement if you’re leasing out a property such as an office, shop or restaurant.

It outlines the details around the rental and ensures you and the tenant are on the same page. It can also help to protect you and your property, if a dispute arises.

There’s lots to include in a commercial tenancy agreement, from general information to very technical details.

Our experts can work with you to write a lease geared to your exact circumstances, if you want a hand. Get in touch to learn how we can help you to ensure everything is covered.

What to include in a commercial tenancy agreement

While commercial leases vary, there are things every landlord should include in a commercial tenancy agreement:

  1. Details around the terms of the agreement.
  2. Use of the property.
  3. The landlord’s responsibilities.
  4. The tenant’s responsibilities.
  5. Rent amount and payment method.
  6. Guidance on breaking or renewing the contract.
  7. Provisions based on the nature of the property or business.

More detail on each of these is below. For your lease to cover your exact situation, each of these points should outline specific rules and requirements, so it’s best to speak to a professional when drafting a commercial tenancy agreement.

1.       Details around the terms of the agreement

This section will include your name, the tenant’s name and the property address. It will outline the tenancy start date and when the tenancy is due to end or be revisited. You could also state it will turn into a rolling contract that continues by a month at a time.

If you plan to review the lease periodically, make sure you outline that here.

2.       Use of the property

In this section, clearly outline what the tenant is can and can’t use the property for. You might want to include rules around noise levels, hours of operation or the number of people allowed in the property at a given time.

3.       The landlord’s responsibilities

State the aspects of the property you agree to look after. This may be general maintenance and any insurance you’ll be responsible for. You and the tenant should also agree about when you’re allowed to enter.

If you have a nearby property, you might promise not to let it out to a competitor of the tenant.

Include any notice period you agree to give to the tenant, should you need to make changes to the lease or ask them to leave.

4.       The tenant’s responsibilities

Outline exactly what the tenant will need to take care of: things like repairs, liability or casualty insurance, and utility bills.

Include guidance about any changes the tenant can make to the property, including whether they’re permitted to paint or renovate. Make it clear if they’ll need to return the building to its original condition when the tenancy has ended.

Similar to the above, outline the notice period they’re required to serve if they want to end the agreement early.

5.       Rent amount and payment procedure

State the rent amount, date, and how it should be paid to the landlord (e.g. bank transfer). Outline any grace period or penalties for late payments.

6.       Guidance for breaking or renewing the contract

Say what will happen if the tenant or landlord wants to end the contract early. If any dispute arises, this section could be the key in deciding what rights either party has, and what the next steps are.

You should also have a ‘forfeiture provision’, which outlines your right to end the tenancy and how to do it. Likewise, cover what the procedure is for renewing the lease. This might include stating the right to increase the rent or change the terms of the contract.

7.       Specific provisions

Here is where you can include restrictions on things like hazardous materials on the premises, information about sub-letting, or guidance about parking.

Once you have outlined the basic information, you’ll need to format it so it’s clear and easy to reference.

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These are just the basic things a commercial tenancy agreement should include. To be certain your rights as a landlord and the property you’re renting out are protected, you can speak to one of our commercial property solicitors. We could help you create a commercial tenancy agreement that meets the requirements of your exact circumstances, allowing both you and your tenant to rest assured all the details are in place so you can focus on business.

Note: First4lawyers offers this information as guidance, not advice. Before taking any action, you should seek professional assistance tailored to your personal circumstances and not rely on First4lawyers’ online information alone.