Commercial landlord and tenant
New commercial lease for a landlord
Legal work for landlords granting a new business lease, drafted to protect your rent, the building and the property's investment value.
This work depends on the details, so our team prepares a quote for you, usually within one working day.
Before agreeing heads of terms, check two things: whether your lender must consent to the letting, and the property's EPC rating. Either can hold up a letting if it is discovered late.
When you let commercial premises, the lease is the asset. A well-drafted lease keeps the rent coming in, puts the right costs on the tenant, protects the building and makes the property easier to sell or borrow against. A weak lease can do the opposite, even with a good tenant.
Property owners, investors and businesses letting out space use this service, whether the letting is a single shop, an office floor or an industrial unit. Your solicitor drafts the lease from the agreed heads of terms (the main points settled through the agents), negotiates with the tenant's solicitor, checks the tenant and any guarantor, and completes the letting.
Leases vary in length, complexity and how hard the tenant negotiates, so the Keyfolio team prepares your quote individually once you describe the property, the tenant and the main terms. We aim to answer requests within one working day.
What is involved
A typical letting runs like this:
- Heads of terms: reviewing the rent, length, rent reviews (when the rent is reset), break rights (options to end the lease early), repair, permitted use and any incentives, and flagging gaps before drafting starts.
- Your title: confirming you can grant the lease, including any consent needed from your lender or a superior landlord (your own landlord, if you hold a lease).
- Drafting: preparing a lease that fits the building, with clear repair, insurance and service charge terms and sensible controls on use, alterations and dealing with the lease.
- Investment value: keeping the features buyers and lenders look for, such as a clear rent review, full recovery of building costs, limited break rights and a financially strong tenant or guarantor.
- Security of tenure: if the lease is to sit outside the Landlord and Tenant Act 1954, so the tenant has no automatic right to renew, serving the warning notice and obtaining the tenant's declaration before it commits.
- Protection: a rent deposit deed or guarantee, checks on the tenant's identity and finances, and break conditions that are clear.
- Negotiation: responding to the tenant's amendments and explaining which changes affect value.
- Completion: signing, collecting the first rent and any deposit, and keeping the documents together. The tenant's solicitor registers the lease at HM Land Registry if it is for more than seven years.
What the legal fee covers
- Reviewing the heads of terms and your title to the property
- Drafting the lease and any rent deposit deed or guarantee
- Negotiating the tenant's amendments
- Serving the 1954 Act warning notice and handling the declaration, if the lease is contracted out
- Identity checks on the tenant and any guarantor
- Obtaining your lender's or superior landlord's consent to the letting, where needed
- Arranging signing and completion of the lease
- A short report on the final terms
Costs you may see on top
- Fees your lender or superior landlord charges for consenting to the lease
- An energy performance certificate (EPC), which most premises need before they are let
- Letting agent's fees and a surveyor's advice on rent
- An agreement for lease (a contract to grant the lease once works are done) or a licence for the tenant's fit-out
- Company searches or credit checks on the tenant and guarantor
- Extra negotiation time if the tenant's solicitor proposes extensive changes
What to have ready
- The heads of terms agreed with the tenant, and who the letting agent is
- Your title number or deeds, and your lender's details
- A plan showing the premises being let, any parking and shared areas
- The tenant's full name, company number and any guarantor
- The property's current EPC and building insurance details
- The service charge budget and what it covers, if there is one
- Details of any works you or the tenant will carry out before or after the start
How long it takes
A straightforward lease of a single unit on standard terms often completes in 4 to 8 weeks from agreed heads of terms. Allow longer if the tenant negotiates heavily, your lender's consent is needed or works must be finished before the lease starts.
If the lease is to be contracted out of the 1954 Act, serve the warning notice at least 14 days before the tenant commits; if time is shorter, the tenant can make a statutory declaration instead, which is easily arranged. Clear, complete heads of terms are the simplest way to avoid weeks of argument over drafting.
Things to watch for
- Check your mortgage before agreeing terms. Many commercial loans require the lender's consent to a new lease, and letting without it can put you in breach of the loan.
- Decide early whether the lease will be contracted out of the 1954 Act. If the procedure is not completed before the tenant commits, the tenant is likely to have a right to renew when the term ends.
- In England and Wales you generally cannot let commercial premises with an EPC rating below E unless you have registered an exemption. Check the rating before you market the property.
- Plan for the coming ban on upward-only rent reviews. It is in the English Devolution and Community Empowerment Act 2026 and will apply to new leases in England and Wales from a date the government sets, so ask your solicitor how review clauses should be drafted in the meantime.
- Ask for a rent deposit or guarantor where the tenant is a new or small company. A director's guarantee or a deposit held under a deed gives you something to fall back on if the business fails.
Questions people ask
What does contracting out of the 1954 Act mean?
Under the Landlord and Tenant Act 1954, many business tenants in England and Wales have a right to a new lease when theirs ends, and the landlord can refuse only on specific grounds. Contracting out means agreeing that the lease will sit outside those rules. You serve a warning notice and the tenant signs a declaration before committing: a simple declaration if the notice was given at least 14 days earlier, or a statutory declaration if not. Northern Ireland has its own rules.
Who pays the legal costs of a new lease?
Each side normally pays its own solicitor. Some landlords ask the tenant to contribute to theirs, but that is a commercial point to agree in the heads of terms rather than raise later. During the lease, the tenant is usually required to pay your reasonable costs when it asks for consent to assign, sublet or alter the premises.
Does the lease have to be registered?
A lease granted for more than seven years must be registered at HM Land Registry, which the tenant's solicitor normally does after completion. Shorter leases are not usually registered but still bind the parties. The tenant may also have SDLT to pay: in England and Northern Ireland, it is charged where the net present value of the rent (today's value of all the rent due over the term) is more than £150,000, and there can be SDLT on any premium too.
Should I charge VAT on the rent?
You can only do so if you have opted to tax the property and are VAT registered; otherwise rent on commercial property is usually exempt. Opting to tax lets you recover VAT on costs such as refurbishment, but it makes the rent dearer for tenants who cannot recover VAT, such as some charities, banks and medical practices. The decision normally lasts for many years, so take tax advice before opting.
Who does the work
Your matter is handled by a law firm regulated by the Solicitors Regulation Authority, the Council for Licensed Conveyancers or CILEx Regulation, or in Northern Ireland by a solicitor regulated by the Law Society of Northern Ireland. At the moment the law firms on our panel act for property in England and Wales, so for property in Northern Ireland we tell you whether a firm can act for you before we pass your details to anyone. The firm confirms who will work on your file, their experience and its terms before you instruct it. How we choose our firms.