Part 4Types of property rental agreement
You can rent business premises by leasing them. If you require
premises for a short term - for instance, to complete a large order
- then consider a licence rather than a lease.
Leases typically have agreements of between three and 25 years
and can offer long-term stability. However, lease lengths are
getting shorter and recent research suggests that the average
length of a business lease is below eight years.
You will probably be able to negotiate this with your landlord
and should certainly check before signing the contract.
Other than the rent itself, key areas of the contract that you
should study include:
- lease length
- break clauses
- service charges
- dilapidations (an amount payable to the landlord at the end of
- responsibility for maintenance and repairs to the building and
Rent is usually paid quarterly in advance. However, you may be
able to pay monthly. This can form part of negotiations with your
landlord. If your business is new, you may want to consider a short
lease of three years or less or ask for a break clause.
Check how much these are and what services they cover, such as
cleaning and heating. Establish what facilities you may be sharing
with other tenants. Service charges are an additional cost to the
rent and can be more expensive than if you organise them yourself.
You have the right to challenge service charges.
A licence could be of benefit to a small business looking for a
short-term property solution, of up to one year. Licences generally
offer more flexibility and can usually be terminated at short
notice on both sides. However, you would not have an automatic
right to renew a licence and it is always advisable to seek
professional advice, eg from a chartered surveyor or solicitor.
Solicitor search from the Law Society of Scotland.