Lease negotiation: know where you stand

01 Dec Lease negotiation: know where you stand


You have found a home for your business? Great! But how do you make sure that your business will be safe in this home, and you can maximise the return for your business?

Following on from my initial post on leasing a business premises, a strong negotiation with the owner of the premises (the lessor) will place you and your business in a good starting position. You have to make sure that your desired business premises fit the purpose of your business.

Negotiation should involve all aspects of leasing the premises, from moving in to leaving the premises. That way, you are covered in case anything unexpected occurs.

A few essential terms to negotiate are:

  • Who is going to pay for what?
  • What you can or can’t do with the property – fittings, modifications, even painting
  • What would happen if the property is damaged?
  • What happens to your business if the owner wants to sell the property, or renovate?

For example, before moving in, you need to think about shop fittings and who would be responsible for installation costs. You have to consider what would happen to the fittings at the end of the lease term. Is it your responsibility to restore the premises to its original condition?

Depending on the size and use of the premises, some lessors may offer to pay the full cost of fittings, some may share the cost, and others choose not to bear any costs. This is an important aspect to carefully consider and negotiate with the lessor because it has the potential to affect other terms of your lease, such as rental amount, level of insurance, ongoing maintenance costs and most importantly, when you decide to leave the premises.

So you see why it is crucial to know your rights and negotiation can help you safeguard your rights. You can read a few case examples here of how things can go wrong.

A&J Montgomery Legal can guide you through the negotiation process, so you know exactly where you stand and what you are covered for. Contact us for an obligation free consultation.