What To Consider When Looking At Annual Rent Within Your Commercial Property Lease

When taking on a commercial property lease, there is a lot to consider. In this blog post our commercial property solicitors share what you should consider when looking at annual rent within your commercial property lease. By being aware, you can better prepare. However, if you are taking on a commercial property lease, why not speak to our team of commercial property lawyers to ensure you and your business are safe, secure and protected.

When commercial property landlords take on new tenants, they may require some additional security. This is done to ensure that the landlord is protected if the tenant was to default on their rent. You will find that this is more common with new businesses when they are becoming a commercial property tenant.

There are two main ways that a potential commercial property tenant may be asked to enter the lease. They could need to give a Rent Deposit Deed. Or they could act as a Guarantor in the Lease as an individual. In some cases, the landlord will require both the rent deposit deed and the business owner acting as a personal guarantor.

Rent Deposit Deed

The rent deposit is contained within the Rent Deposit Deed. This is a payment that is payable on Completion of the Lease. It will tend to be the equivalent of 3 to 6 months rent. It can only be used by the landlord is certain cases. For example, if a rent payment is missed or if the property is forfeited. In the case that neither of these things happen, the rent deposit is paid back to the tenant at the end of the commercial property lease term.

Guarantor of Commercial Lease

In some cases, the landlord will ask the tenant to become a guarantor to the lease. This is also known as a Surety. It means that the person will become obligated to fulfil the obligations of the tenant if they are unable to. This will happen if the tenant becomes insolvent. At this time, the landlord will request the rent owed by the tenant to be paid by the Guarantor. In many cases, the Guarantor will be shareholders of a company. It means that they will become personally liable in such events.

If you are a landlord or tenant needing support with the annual rent within the commercial property lease, speak to our commercial property law experts. We can let you know what you need to look out for. Our team will review, draft and negotiate all commercial property leases to ensure you and your investment are protected.