Most tenants negotiate the rent and accept the rest of the document. That is the wrong emphasis, because several other clauses have a larger effect on total cost and on your ability to run the business.
| Clause 1 | term, renewal and break rights |
|---|---|
| Clause 2 | who repairs what |
| Clause 3 | rent review mechanism |
| Clause 4 | permitted use and alterations |
Term, renewal and breaks
The term determines your security and your commitment, and they pull in opposite directions.
A long term gives security — valuable if you are investing in the premises or building a location-dependent customer base. It also commits you to the rent for that period whether or not the business works.
A short term gives flexibility but leaves you exposed at renewal, when the landlord knows your fit-out is sunk and moving is expensive.
Two provisions worth negotiating for:
A break right allowing you to end the lease at a defined point, giving flexibility within a longer term. Note that break clauses are usually conditional — on notice given correctly and on the tenant being up to date. Conditions are strictly applied, and a break exercised imperfectly simply fails.
A renewal option giving you the right to a further term on defined terms. The value depends on how the new rent is determined; an option to renew "at market rent" provides much less protection than one with a stated basis.
The structural point: the moment your bargaining power is lowest is at renewal, after you have invested in the site. Anything that constrains the landlord's discretion at that moment is worth paying for in the original negotiation.
Repairing obligations
This is where the largest hidden costs sit.
Leases vary from the tenant maintaining only the interior to the tenant being responsible for the entire structure, including roof and exterior. The second can impose costs that dwarf the rent.
Two protections a tenant should seek:
A schedule of condition. A photographic record of the premises at the start, agreed and attached to the lease. Without it, an obligation to keep the premises in good repair can mean putting them into better condition than you received them — a real and expensive outcome where the building was already worn.
Clarity on major elements. Roof, structure, drainage, and in a storm-exposed region, storm damage. Establish who repairs, who insures, and what happens if the premises become unusable.
That last point deserves specific attention here. If the building is damaged and you cannot trade, does rent continue? Well-drafted leases suspend rent while the premises are unusable, usually where the damage is insured. A lease silent on this can leave a tenant paying rent on premises they cannot occupy.
Alongside this, check the service charge if the premises are in a shared building: whether it is capped, what it covers, and whether it can include major capital works. An uncapped service charge is an open-ended liability.
Rent review
How rent changes over the term matters as much as where it starts.
- Fixed increases — predictable, and easy to model
- Index-linked — tracks inflation; ask whether there is a cap
- Open market review — reset to market rent at intervals, with more uncertainty
- Turnover rent — a base plus a percentage of sales, common in retail and tourism locations
One provision to watch: upward-only review, where rent can rise but not fall. Common in commercial leases, and it means a downturn does not reduce your cost even as your revenue falls.
For a seasonal or tourism-dependent business, turnover rent can align landlord and tenant interests usefully — the landlord shares both the upside and the risk. It is worth proposing where the landlord has a stake in the location's success.
Use, alterations and assignment
Permitted use. Defined narrowly, this restricts how you can adapt if the business changes. Negotiate a description broad enough to allow reasonable evolution.
Alterations. Establish what you may install, whether consent is required, and critically whether you must remove it at the end. A reinstatement obligation can be a substantial and entirely unbudgeted cost at exit.
Assignment and subletting. Whether you can transfer the lease matters more than tenants expect, because a business is much harder to sell if the buyer cannot take over the premises. A lease with no right to assign reduces the value of the business itself.
Before signing
- Have a lawyer review it — the cost is small against the liabilities
- Confirm the landlord's title and their right to grant the lease
- Check planning permits the use, and who obtains any consent required
- Agree and attach a schedule of condition
- Model total occupancy cost, not just rent — service charge, insurance, repairs, tax
- Confirm what happens on damage, and on early exit
Point five is the discipline that prevents the common surprise: the rent is rarely the largest part of what occupying premises actually costs, and a lease compared on rent alone can be the more expensive one.
Frequently asked questions
Why is renewal the weakest moment for a tenant?
Because your fit-out is sunk and moving is expensive, so the landlord's position is strongest. Constraints on their discretion at renewal are worth paying for in the original negotiation.
What is a schedule of condition and why does it matter?
An agreed photographic record of the premises at the start. Without one, an obligation to keep them in good repair can mean returning them in better condition than you received them.
What should a lease say about storm damage?
Who repairs, who insures, and whether rent is suspended while the premises are unusable. A lease silent on this can leave a tenant paying rent on premises they cannot occupy.
Why does the right to assign matter?
Because a business is much harder to sell if the buyer cannot take over the premises — a lease with no assignment right reduces the value of the business itself.
