Common lease clauses - the premises, rights granted and reserved and use
When granting or taking a lease, the extent of the leased premises, the tenant's rights and the permitted use of the premises need to be clearly defined within the lease. In the below, we have set out the key considerations when agreeing these provisions.
Extent of the premises
The extent of the premises needs to be clearly defined in the lease. If the lease is of premises within a building, such as a dentist or pharmacy within a surgery, it will generally be an internal only demise and the various parts of the building which are included within the leased premises and excluded from the leased premises should be set out in detail.
Failure to do so could lead to disputes in the future as to who has the responsibility for repairs to the premises and the building and the service media serving the premises and/or building.
If the lease being granted is for a term in excess of seven years it will be compulsorily registrable at the Land Registry and therefore a Land Registry compliant plan showing the extent of the leased premises will also be required. The general Land Registry guidance on compliant plans is set out here. It is important to note that the requirements will depend on the nature of the leased premises.
Rights granted and reserved
The parties to the lease should consider carefully exactly what rights are required for the tenant to occupy the premises and they should be documented in the lease. Such rights to be considered should include:
- access rights, both over any internal parts of the building and external parts
- a right to enter the landlord’s adjoining property for purposes of repair or otherwise to comply with lease covenants
- a rights of support and protection
- a right to use emergency fire escapes
- a right to install plant and equipment including air conditioning plant at the building
- car parking rights
- a right to use loading bays
- service media rights
- signage rights
The parties should also consider what rights the landlord will require over the leased premises. Such rights reserved for the benefit of the landlord may include:
- a right of support and protection
- service media rights
- rights to develop the remainder of the landlord’s property
- a right to erect scaffolding at the building
- a right to enter onto the premises
Given that interruption in a tenant’s business can cause substantial losses a tenant solicitor will want to ensure that there are restrictions on the landlord’s right of access to the premises. This may include not accessing at certain times/dates, only accessing on written notice, where reasonably necessary and for a reasonable time, making good any damage caused, maintaining access to the premises at all times and not obscuring the shop front or fascia of the Property (if there is one).
Permitted use
The use of the property will be limited to a permitted use, which should correspond to the use which is permitted by planning law. A tenant should however be aware that the fact that a use is permitted by the lease does not mean that it is permitted under planning and this should be checked by a tenant's solicitor as part of the due diligence process. A tenant will generally have an obligation to comply with all laws in respect of the property and therefore if it uses the property for a use which is not permitted by planning law it is possible that the lease could be forfeited by the landlord.
One consideration in respect of new leases is the recent changes to the Use Classes Order and any references to a particular use under the Town and Country Planning (Use Classes) Order 1987 should ensure that it refers to the updated use especially in renewal leases where terms and definitions are carried over from old leases.
In addition to the permitted use a user clause will contain further restrictions on the use of the property to ensure that the property is not used for any immoral use or use which is likely to affect adjoining owners and occupiers.
From a landlord's perspective they may want to include a keep open provision in the user clause. This will require the tenant to keep the premises open for business and is particularly important where the rent is wholly or partly a turnover rent. Without such a provision the tenant could simply close the store and avoid paying rent.