A commercial lease is usually the biggest contract a small business signs, and most of the cost sits in five clauses. Read these before anything else, and ask for changes before you sign, while the landlord still wants you as a tenant.

1. Rent review

Find out how the rent goes up: by a fixed percentage, by inflation, or to “market rent”. A fixed increase is easy to budget for. A market review can bring a sharp rise, so check how it’s worked out, who chooses the valuer, and whether you can dispute the result.

Watch for a “ratchet”, which stops the rent from ever going down, even if the market falls.

2. Make-good

This says what state you must leave the premises in. Some leases ask you to return the shop to a bare shell, which can cost more than the fit-out did.

Photograph everything before you move in and agree a written schedule of condition with the landlord. Then you only have to put back what was there on day one.

3. Outgoings

Rates, insurance, cleaning, security and repairs can be passed on to you on top of the rent. In a shopping centre they can add a third again.

Ask for last year’s figures and an estimate for this one, and check which costs are excluded. Major structural repairs should stay with the landlord.

4. Assignment

If you sell the business, the buyer will need to take over the lease. Check when the landlord can say no, what information they can ask for, and how long they have to decide.

Check too whether you stay liable after you leave. Some leases keep the original tenant on the hook if the new one stops paying.

5. Option to renew

An option lets you stay for another term at your choice, which protects the goodwill you build. Note the window for using it, usually a few months before the lease ends. Miss the date by a day and the option can be lost.

Put the date in two calendars and tell your accountant. If you’ve breached the lease, even in a small way, the landlord may be able to refuse the option, so keep the rent and outgoings paid on time.

Before you sign

Don’t sign a heads of agreement or pay a deposit until you’ve read the full lease. Changes are easiest to win before signing, and almost impossible after.

We read leases for a fixed fee and mark every risk in plain English, usually within 48 hours.

This note is general information, not legal advice for your situation.