"Last time, I highlighted some of the key aspects to look out for in a Heads of Terms document, such as lease length, rent agreed and the deposit required. However, as commercial leases can be complex, and property developer, SEGRO, highlights a it’s worth looking at additional considerations before signing a new lease.

Firstly, it is important to understand that commercial leases will either be granted inside or outside of the 1954 Act of Protection. Having a lease within the Act allows tenants to renew their contract on similar terms. Solicitors will tend to advise to take a lease with ‘54 Act protection, but bear in mind that leases less than five years, or with break clauses, are less
likely to be offered on this basis.

Rent reviews are another key section to note. Leases over five years will usually be granted with a rent review, allowing the landlord to keep rents in line with market values. If an increased rent is agreed at rent review it should be formally documented and held with the lease.

Next, be clear of your options in case you outgrow your space. For example, what are your options; can you assign or sublet your lease or can you negotiate with your landlord to take on new or additional space to meet your growing business requirements?

Another aspect of the lease is the service charge - check what this includes. For example, does the estate benefit from security? Who is responsible for maintaining the estate’s roads and landscaping?

In respect of insurance, the Landlord will usually insure the structure of the unit and then recharge this back. The tenant is usually responsible for insuring the contents and business disruption cover.

Who is responsible for the upkeep of the building? If you take a Full Repairing and Insuring lease (FRI), you will be responsible for upkeep and repairs of the property and will be liable for restoring the building to a good condition at the end of the term. You can attempt to limit your repairing liability by having an agreed schedule of condition, a document which highlights areas of damage or disrepair using photographs that is agreed by both parties before the start of occupancy and attached to the lease.

Throughout the process, costs will be occurred, so be clear from the start as to who is covering which costs, such as solicitor’s services, charges for assessing alterations, the cost of preparing a schedule of condition or structural surveys - usually each party will pay for its own costs.

Signing a lease is legally binding, so always remember to engage the services of a professional solicitor to advise and clarify the finer points of the lease.”

SEGRO’s London assets are located across more than 60 estates and clustered around the key Heathrow, Park Royal and Greenford markets and in and around the M25, M40 and A40 corridor. To find out further information about SEGRO, please visit www.SEGRO.com , or contact SEGRO’s customer services on: 01753 537171.