Granting a Commercial Lease: Solicitors for Landlords and Tenants in London
Our SRA-regulated solicitors draft, review and negotiate commercial leases for landlords and tenants across London — shops, offices, restaurants, clinics and warehouses.
What does granting a commercial lease mean?
Granting a commercial lease means a landlord gives a business tenant the exclusive right to occupy premises for a fixed term in return for rent. The lease sets the rent, repairs, service charge, break rights and whether the tenant can renew — so the terms agreed at the start shape the next 5, 10 or 15 years of the relationship.
Adam Bernard Solicitors acts for landlords granting leases and for tenants taking them, from shops and restaurants to offices, clinics and warehouses across London. Our SRA-regulated property team drafts, reviews and negotiates the lease, carries out due diligence on the premises and gets the deal to completion. Call 0207 100 2525 or speak to us at our High Holborn or Upton Park offices.
What does granting a commercial lease involve?
A commercial lease grant has five stages: heads of terms, drafting, due diligence, negotiation and completion. Most straightforward leases complete in 4 to 8 weeks once heads of terms are signed; leases with works, a superior landlord or a lender’s consent can take longer.
- Heads of terms. The landlord and tenant (often through agents) agree the main commercial points: premises, term, rent, rent-free period, rent review, break clause, repairs, service charge, deposit or guarantee, and whether the lease is inside or outside the Landlord and Tenant Act 1954. Heads of terms are marked “subject to contract” and are not legally binding.
- Drafting the lease. The landlord’s solicitor prepares the draft lease and supporting documents, such as a rent deposit deed or an agreement for lease if works are needed first.
- Due diligence. The tenant’s solicitor checks the landlord’s title at HM Land Registry, runs searches, raises enquiries and confirms the property’s planning use and EPC rating.
- Negotiation. Each side’s solicitor proposes amendments until the wording matches the heads of terms and protects their client.
- Completion and registration. The lease is signed and dated, rent and deposit are paid, and post-completion steps follow — an SDLT return to HMRC where required, and registration at HM Land Registry for leases of more than seven years.
Key terms to agree before you sign
The clauses that cost businesses most when they go wrong are rent review, repairs, break rights and alienation (assignment and subletting). We negotiate each one against your plans for the premises.
| Clause | What it controls | What to watch for |
|---|---|---|
| Term and break clause | How long the lease runs and when either side can end it early | Strict break conditions (e.g. full vacant possession, no arrears) that can make a break fail |
| Rent and rent review | Starting rent and how it changes | Upwards-only reviews — being banned for new leases (see below) |
| Repairs | Who maintains and repairs the building | A “full repairing” lease on an old building — use a schedule of condition to limit liability |
| Service charge | Tenant’s share of shared-area costs | Caps, exclusions and the cost of major works |
| Alienation | Whether the tenant can assign or sublet | Restrictions that stop you selling the business with the lease — see assignment of a commercial lease |
| Permitted use | What the premises can be used for | A use clause narrower than the planning use, which limits who can take it over |
| Security | Rent deposit or guarantee | Personal liability for directors — see director guarantees |
Security of tenure: inside or outside the 1954 Act?
Most business tenants have a statutory right to renew their lease at the end of the term unless the landlord and tenant agree, before the lease is granted, to “contract out”. This right comes from Part 2 of the Landlord and Tenant Act 1954, and the Law Commission describes it as “security of tenure”.
To contract out, the landlord must serve a warning notice on the tenant before the tenant commits to the lease, and the tenant must sign a declaration accepting it, under the procedure in the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003. If the notice is served less than 14 days before the tenant is bound, the tenant must make a statutory declaration, which our Commissioner for Oaths service can witness. If the procedure is not followed correctly, the tenant keeps its renewal rights.
Reform is under way but not yet law. The Law Commission published a second consultation on 16 June 2026 proposing, among other changes, to raise the threshold below which short tenancies fall outside the Act (currently 6 months) and to simplify contracting out. The consultation closed on 16 September 2026 and a final report is due in due course. For tenants who already have renewal rights, see our commercial lease renewal service.
The upwards-only rent review ban (2026)
The English Devolution and Community Empowerment Act 2026 bans upwards-only rent review clauses in new and renewal business leases in England and Wales. The Act received Royal Assent on 29 April 2026, but the ban starts only when commencement regulations are made — it was not yet in force as of October 2026.
Once it applies, open-market, index-linked (RPI/CPI) and turnover rent reviews must be able to go down as well as up. Fixed and stepped rents are still allowed. Existing leases are not affected, but renewal arrangements (such as options to renew) entered into on or after 17 March 2026 can be caught. Anyone granting or taking a lease now — especially one with a renewal option or a review date after the likely commencement date — should agree how the rent review will work under the new rules.
Costs and tax when a commercial lease is granted
A new commercial lease can trigger Stamp Duty Land Tax (SDLT) on the rent, not just on any premium. Under HMRC’s non-residential rates, no SDLT is due on rent where the lease’s net present value (NPV) is £150,000 or less; the portion from £150,001 to £5,000,000 is taxed at 1%, and above £5,000,000 at 2%. Any premium is taxed at the non-residential rates. The SDLT return and payment are due within 14 days of completion.
Other costs to budget for:
- Legal fees — each side normally pays its own; tenants are often asked to contribute to the landlord’s costs, which is negotiable.
- VAT — payable on the rent if the landlord has opted to tax the building.
- Land Registry fees — leases granted for more than seven years must be registered within two months of completion, under HM Land Registry Practice Guide 25.
- Rent deposit — commonly 3 to 6 months’ rent for new businesses.
EPC rules landlords must meet before letting
A landlord cannot lawfully grant a new lease of commercial premises rated below EPC band E unless a valid exemption is registered. This comes from the minimum energy efficiency standard, explained in GOV.UK’s guidance for non-domestic landlords. Tenancies of 6 months or less and of 99 years or more are generally outside the rules.
In June 2026 the government confirmed it will not introduce the previously proposed EPC C requirement for 2027. Instead, buildings over 1,000 sq m are expected to reach EPC B from 2031 where cost-effective; smaller buildings stay at EPC E for now. Check the EPC before agreeing who pays for energy upgrades in the lease.
Shop and retail leases in London
Shop leases carry extra points to negotiate: permitted use, opening hours, signage, turnover rent and keep-open obligations. Retail tenants should also check the planning use class covers their trade and agree rent-free periods for fit-out. We act on shop leases across Central and East London, from high-street units to market and shopping-centre lets.
Acting for landlords and tenants
For landlords
We draft a lease that protects your income and the value of your building: clear repairing and service charge provisions, enforceable rent review and break terms, a rent deposit or director’s guarantee, and a contracting-out procedure done correctly first time. Where you hold a head lease, we check that the new underlease complies with the superior landlord’s terms and obtain any consent needed.
For tenants
We review the draft lease line by line, explain every obligation in plain English, and negotiate changes that limit your liability — particularly on repairs, service charge, break conditions and the right to assign if you later sell the business. We also complete the title checks, searches and enquiries on the premises before you commit. If you later need to leave early, see our lease surrender service.
Why choose Adam Bernard Solicitors for your commercial lease?
- SRA-regulated solicitors (SRA nos. 598171 and 656730) with 15 years in practice and 15,000+ clients served.
- Offices in High Holborn (Central London) and Upton Park (East London), plus video meetings by Zoom, Teams, WhatsApp or Skype.
- One team for the full property life cycle: commercial property sales and purchases, lease grants, assignments, renewals and surrenders.
- Lease disputes handled in-house by our civil and commercial litigation team.
See all our commercial property solicitors in London services, or call 0207 100 2525 to book a consultation.
This page is for general information only and does not constitute legal advice. Last reviewed: 23 October 2026.
Frequently Asked Questions
What does granting a commercial lease mean?
It means a landlord gives a business tenant the exclusive right to occupy premises for a fixed term in return for rent, on terms set out in a written lease.
How long does it take to grant a commercial lease?
A straightforward lease usually completes in 4 to 8 weeks after heads of terms are agreed. Works, lender consent or a superior landlord's consent can extend this.
Are heads of terms legally binding?
No. Heads of terms are normally marked "subject to contract" and are not binding until the lease is signed and completed.
Do I need a solicitor to grant a commercial lease?
There is no legal requirement, but the lease, contracting-out procedure, SDLT return and Land Registry registration all carry legal risk if done wrongly. Most landlords and tenants each instruct their own solicitor.
Who pays the legal costs of a new commercial lease?
Each party usually pays its own costs. Landlords sometimes ask the tenant to contribute to theirs; this is a negotiable point in the heads of terms.
Does a commercial lease need to be registered at the Land Registry?
Yes, if it is granted for more than seven years. It must be registered within two months of completion.
Is stamp duty payable on a commercial lease?
SDLT is payable on rent only where the lease's net present value exceeds £150,000. Any premium is taxed separately at non-residential rates.
What is contracting out of the Landlord and Tenant Act 1954?
It is an agreement, made before the lease is granted, that the tenant will not have a statutory right to renew. The landlord must serve a warning notice and the tenant must sign a declaration.
Are upwards-only rent reviews banned?
The ban is law under the English Devolution and Community Empowerment Act 2026 but was not yet in force as of October 2026. It will apply to new and renewal business leases once commenced.
Which commercial lease solicitor should we use for new business premises?
Choose an SRA-regulated firm that regularly handles commercial leases, explains terms in plain English and can deal with title, SDLT and Land Registry steps. Adam Bernard Solicitors acts for landlords and tenants across London.
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