There are a number of key points that must be covered in any well drafted business tenancy agreement and some of them are as follows:
- Clear identification of who the landlord is and who the tenant is.
- The term (duration) of the business tenancy.
- The amount of rent payable, any rent free periods or rent holidays (usually offered at the start of a new business tenancy).
- Will there be a deposit to be paid for security to the landlord?
- What the tenant’s obligations are with regards to insuring and repairing? What are the landlord’s obligations for insuring the property? The lease must make it crystal clear the area for which the tenant is responsible and the full extent of his responsibility and the landlord’s insurance of the whole structure of the property.
- Any service charge that is applicable and how this is calculated and apportioned.
- Restrictions on use of the property.
- Alteration, change of use relating to the property and landlord’s consent to the same.
- Will there be any break clauses allowing the tenant to break the lease at given times without incurring further liability?
- Will there be a rent review midterm of the business tenancy, if so will rent be increased upwards only? Will it be indexed linked/ at market value and is there a procedure to follow in the event of a dispute between the landlord and tenant?
- The rights for the landlord to terminate (forfeit) the business tenancy if the tenant breaches a term (covenant) of the business tenancy. For example failure to pay the rent in a timely manner, change of use or alteration of the property without landlord consent?
- What will happen if an ‘act of God’ occurs or matters outside the control of the landlord which result in the property not being suitable for occupation by the tenant for a given period of time?
The above list is by no means exhaustive, but it should give you a all-round guide for things to consider.