20 Questions to Ask When Negotiating a Commercial Lease

Signing a commercial lease is a significant milestone for any business. It can shape the success of your enterprise, influence your operating costs, and impact your flexibility to grow or pivot in the future. However, commercial leases are often lengthy, dense legal documents laden with technical terms and responsibilities. Before you commit to years—and possibly tens of thousands of pounds/dollars in rent—you must ensure the agreement truly supports your business goals.

Asking the right questions can help you avoid hidden pitfalls, unexpected expenses, and constraints that could stifle your company’s potential. These questions will aid you in understanding the property, financial obligations, legal rights, and long-term implications of the lease. By getting clarity from the landlord and possibly adjusting terms before signing, you position yourself for a smoother, more secure tenancy.

This article presents 20 key questions to ask during the negotiation phase. We’ll provide context, reasons why they matter, and some possible scenarios to illustrate how different answers could affect your final deal. While every situation is unique, these questions offer a starting framework for tackling negotiations effectively.

1. “What Is the Length of the Lease and Are There Any Break Clauses?”

Why Ask:
The lease term determines how long you are locked into paying rent. Too long, and you risk being stuck if your business changes direction; too short, and you may face frequent renegotiations or relocations. A break clause allows one or both parties to end the lease early under certain conditions, adding flexibility to the arrangement.

Scenarios:

• Long-Term Stability: If your business is well-established and you’ve invested heavily in fit-outs, a 10-year lease might be desirable. But you’ll want a mid-term break clause or rent review to maintain adaptability.

• Startups and New Ventures: If you’re unsure about the location or growth prospects, a shorter lease (e.g., 3–5 years) or at least a break clause at year 2 or 3 gives you an exit strategy if things don’t pan out.

Follow-Up Point:
If a break clause exists, ask about notice periods and conditions. Some break clauses require you to be up to date on rent and have complied with all covenants. Know these details upfront.

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2. “How Is the Rent Determined, and Is There a Rent Review Mechanism?”

Why Ask:
Understanding how the rent is initially set and if and how it can change over time is crucial. Many leases have rent reviews every few years, which could adjust rent upwards (or sometimes downwards, depending on the terms).

Scenarios:

• Upward-Only Rent Review: Common in some markets, meaning rent can rise but never fall. This may lock you into higher costs if the market dips. You might negotiate a more neutral mechanism tied to market levels.

• Turnover or Index-Linked Rent: If rent ties partly to your revenue or an inflation index, ensure you’re comfortable with the variability. If you expect business growth, it could mean higher future rent; if uncertain, maybe a fixed rent for the first few years is better.

Follow-Up Point:
Inquire about open-market rent reviews or if an independent surveyor decides the new rent. Clarity on the process prevents ugly surprises at review time.

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3. “Are There Any Incentives, Such as a Rent-Free Period or Landlord Contributions to Fit-Out?”

Why Ask:
Landlords often offer incentives to attract quality tenants—rent-free periods, contributions to refurbishment, or staggered rent increases over the first year or two.

Scenarios:

• New Business Launch: If you need time to set up shop and generate revenue, a 3–6 months rent-free period can help you build customer base without immediate rent pressure.

• Existing Landlord Market Competition: If the local market has high vacancy, the landlord might offer to cover some fit-out costs or provide a reduced rent in the first year.

Follow-Up Point:
If incentives exist, confirm how they’re applied. Are rent-free months at the start or spread out over the term? Written confirmations in the lease are essential to avoid misunderstandings.

Understanding the Responsibilities of a Commercial Tenant

4. “Who Is Responsible for Repairs and Maintenance, and How Are Costs Allocated?”

Why Ask:
Repairs and maintenance can add significant overhead. Some leases (like Full Repairing and Insuring, or FRI) push virtually all maintenance costs onto the tenant, including structural repairs and insurance reimbursements.

Scenarios:

• FRI Lease: You handle everything—roof leaks, structural issues, external repairs. This can be expensive, so negotiate for a schedule of condition that limits your liability to returning the property in no worse condition than initially recorded.

• Modified Gross Lease: Perhaps the landlord covers structural and external repairs, while you handle internal maintenance. This reduces your risk of unexpected big-ticket expenses.

Follow-Up Point:
Ask for clarity on what’s considered structural vs. non-structural. If you must pay for roof repairs even though you didn’t cause the damage, think twice or ask for a rent concession or a cap on certain repair costs.

Understanding the Responsibilities of a Commercial Landlord

5. “How Are Service Charges Handled, and Is There a Cap on Them?”

Why Ask:
If you’re in a multi-unit building, the landlord may charge a service fee for common area upkeep, security, or landscaping. These charges can fluctuate, affecting your budget.

Scenarios:

• No Cap, Full Landlord Discretion: Risky, as the landlord could embark on costly improvements, passing the bill to you. You might want a service charge cap or require that any major works be consulted upon before adding them to the service charge.

• Fixed Service Charge or Reasonable Provisions: A transparent service charge with itemized statements annually and a right to audit accounts ensures fairness.

Follow-Up Point:
Ask for previous years’ service charge accounts to gauge typical costs. Historical data can help you anticipate expenses and negotiate limits.

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6. “Is There a Security Deposit or Rent Deposit, and Under What Conditions Is It Returned?”

Why Ask:
A rent deposit or security deposit could tie up thousands of pounds. Knowing when and how you get it back if you comply with lease terms is crucial.

Scenarios:

• Fixed Deposit with Conditions: If the landlord demands a 6-month rent deposit, confirm that it will be returned promptly at lease end, provided there are no arrears or dilapidations claims.

• Gradual Reduction: Sometimes deposit reduces over time if you consistently pay rent on time. Negotiate such a clause if you’re confident in your financial stability.

Follow-Up Point:
Ensure the lease states the conditions clearly and that interest accrued on the deposit (if any) will be yours.

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7. “Can I Assign the Lease or Sublet the Premises, and Under What Conditions?”

Why Ask:
Life changes, and so might your business’s needs. Being stuck in a lease you can’t pass on is risky. Knowing if the landlord allows assignment or subletting can provide an exit strategy if needed.

Scenarios:

• Strict Assignment Approval: If the landlord requires their consent for assignment or subletting, ensure the lease states that consent cannot be unreasonably withheld.

• No Assignment Allowed: If the landlord refuses to allow assignments, you’re locked in. Consider negotiating flexibility if you anticipate growth or uncertainty.

Follow-Up Point:
If the landlord demands a premium or imposes stringent conditions (like requiring a replacement tenant with a better covenant strength), discuss more balanced terms.

Understanding the Legal Aspects of Subletting Commercial Properties in 2025

8. “What Is the Permitted Use of the Property and How Flexible Is It?”

Why Ask:
Leases typically specify what kind of business you can operate. If you’re restricted to selling certain goods or operating a particular type of service, you lose agility.

Scenarios:

• Narrow Permitted Use: If you plan to run a café but might later want to add retail merchandise, a narrow permitted use could prevent that expansion. Ask if you can vary the use with landlord consent.

• Broad Permitted Use: Broad use gives flexibility to adapt business offerings without renegotiation.

Follow-Up Point:
Check if planning permission from local authorities also restricts use. Make sure the lease’s permitted use aligns with your current and future business plans.

9. “Are There Any Restrictions on Signage, Alterations, or Improvements?”

Why Ask:
If you want to put up a sign, refurbish the interior, or add partitions, you need to know what’s allowed. Some landlords impose strict rules for aesthetic or building integrity reasons.

Scenarios:

• Signage Approval: If you’re a retailer relying on external signage, ensuring the lease lets you install appropriate signage (with consent) is crucial.

• Internal Fit-Out: You might want to customize the space to reflect your brand. If every minor change requires landlord approval or additional fees, that’s a challenge.

Follow-Up Point:
Try to secure wording that only “material” or “structural” alterations need approval, while minor internal cosmetic changes don’t.

10. “What Are the Insurance Arrangements, and Who Pays the Premiums?”

Why Ask:
Commercial properties often have building insurance arranged by the landlord, with the tenant reimbursing the premium. Knowing the type of insurance, what’s covered, and if you pay for it matters.

Scenarios:

• FRI Lease Insurance: Usually the landlord insures the building against major risks, and you reimburse them. Ask if they’re required to seek competitive rates or if there’s a cap on how much you must pay.

• Tenant’s Own Contents and Liability Insurance: Separate from building insurance, you might need to arrange your own policy for inventory, equipment, or public liability. Confirm what the landlord’s policy covers and what you must handle independently.

Follow-Up Point:
Inquire if you can review the insurance policy or at least get a summary of coverage and cost. Transparency reduces surprises.

11. “How Are Rent Arrears Handled, and Is There a Grace Period?”

Why Ask:
If business cash flow gets tight and you’re a few days late on rent, what happens? Understanding the landlord’s stance on arrears and penalties ensures you know the consequences of a rough month.

Scenarios:

• Immediate Penalties: Some landlords charge interest on late rent from day one, or threaten forfeiture quickly. This is risky for your business’s stability.

• Grace Period or Communication: If the landlord is open to discussion and gives a short grace period before penalties, that’s more tenant-friendly.

Follow-Up Point:
Try to negotiate a short grace period or a requirement for the landlord to send a reminder before taking severe action.

12. “Are There Any Rent-Free Periods or Stepped Rent Increases to Ease Initial Overheads?”

Why Ask:
This relates to incentives, but specifying how rent escalates over time matters. Gradual rent increases can help you acclimate financially.

Scenarios:

• Stepped Rent: Maybe rent is reduced in year one, normal in year two, and only full in year three. This helps a new business ramp up.

• Agreed Rent-Free Months: If you have extensive fit-out plans, a 2–3 month rent-free period at the start can save capital during the non-income period.

Follow-Up Point:
Confirm the arrangement is explicitly stated in the lease, not just verbally agreed.

13. “What Happens at Lease Expiry—Do I Have Renewal Rights?”

Why Ask:
In jurisdictions like England and Wales, business tenants may have rights under the Landlord and Tenant Act 1954 to renew the lease. If the lease is “contracted out” of these protections, you have no automatic right to remain.

Scenarios:

• Protected Tenancy: If protected, you can request a new lease at market rent. This long-term security might justify investing more in the premises.

• Contracted Out: If no automatic renewal right, you face potential uncertainty at lease end. You might want a clause requiring a certain period of notice if the landlord doesn’t intend to renew.

Follow-Up Point:
Check if the lease “contracts out” of the Act. If it does, consider negotiating a form of first refusal or advance notice clause to avoid abrupt terminations.

14. “Will the Landlord Provide a Schedule of Condition?”

Why Ask:
A schedule of condition is a document recording the property’s state at the lease’s start. Without it, disputes over dilapidations at the end can be messy.

Scenarios:

• No Schedule of Condition: The landlord might claim you must return the property in a better state than it was. This can lead to large repair costs.

• Agreed Schedule of Condition: A record ensures you’re not liable for pre-existing defects. It’s especially crucial if the property is older or needs repairs from the start.

Follow-Up Point:
If the landlord resists providing one, consider getting your own survey and referencing it in the lease. Protecting yourself now prevents disputes later.

15. “What Are the Default and Forfeiture Provisions?”

Why Ask:
If you breach the lease (e.g., not paying rent on time), what steps can the landlord take? Understanding default and forfeiture terms reveals how quickly you can lose your premises if something goes wrong.

Scenarios:

• Strict Forfeiture: The landlord may re-enter and change locks soon after a missed payment. That’s very risky. Negotiate longer notice periods or mandatory notices before forfeiture.

• More Lenient Approach: The landlord must serve a warning notice (e.g., a Section 146 notice) and give you a chance to remedy the breach. This is more tenant-friendly.

Follow-Up Point:
Try to ensure the lease requires a written warning and a reasonable cure period before the landlord can take drastic actions.

16. “Can I Use Part of the Premises for a Different Purpose Mid-Term?”

Why Ask:
Businesses evolve. Maybe you lease a warehouse but later want to convert part of it into office space. Knowing if this is allowed saves negotiation headaches later.

Scenarios:

• Strict Single Use: If stuck with one permitted use (e.g., storage only), any business model shift is hard. You might try to secure a clause allowing changes with landlord consent.

• Flexible Use with Consent: If the lease states that changes to part of the premises require landlord approval but consent won’t be unreasonably withheld, that’s more flexible.

Follow-Up Point:
Specify what “unreasonably withheld” means. The clearer the standard, the less room for dispute.

17. “Are There Any Redevelopment or Demolition Clauses?”

Why Ask:
Some landlords include clauses allowing them to end the lease if they plan to redevelop the property. This can cut short your tenancy unexpectedly.

Scenarios:

• Redevelopment Break Clause in Landlord’s Favor: If they can end the lease on 6 months’ notice to redevelop, you face instability. Negotiate compensation or a guaranteed minimum term before they can use that clause.

• No Redevelopment Clause: More stable for your business long-term. But if included, at least secure a right to compensation if invoked.

Follow-Up Point:
If redevelopment is possible, ensure the notice period is long enough for you to find a new premises and relocate.

18. “What Security of Tenure Rights Do I Have Under Local Law?”

Why Ask:
In England and Wales, if the lease falls within the Landlord and Tenant Act 1954, the tenant might have the right to a new lease at expiry. If contracted out, you waive that right at the start.

Scenarios:

• Not Contracted Out: You can request a renewal and continue occupying if negotiations stall. That’s advantageous if you love the location.

• Contracted Out: No automatic renewal means you must leave or renegotiate at the end. If your business relies heavily on location and footfall, losing automatic renewal could be a big disadvantage.

Follow-Up Point:
If the landlord wants to contract out your renewal rights, consider asking for a longer initial term or a break clause to mitigate that risk.

19. “How Will Disputes or Disagreements Be Resolved?”

Why Ask:
Disputes can arise over rent reviews, service charge calculations, or alleged breaches. Knowing the dispute resolution methods can save time and costs.

Scenarios:

• Arbitration or Mediation Clauses: If the lease provides for mediation or expert determination before court action, that can keep disagreements cheaper and more amicable.

• Court Proceedings Only: Without alternative dispute resolution mechanisms, disputes may go straight to costly litigation.

Follow-Up Point:
Try to include a clause for mediation or arbitration, ensuring that not every problem leads straight to expensive court battles.

20. “Are There Any Specific Local Regulations or Covenants I Should Know About?”

Why Ask:
Beyond standard lease terms, local planning, zoning regulations, or historical building restrictions can limit signage, renovations, or operating hours.

Scenarios:

• Historical Building: If the property is listed or in a conservation area, special approvals might be required for changes to the facade.

• Restrictions on Hours or Noise: Local council conditions may prohibit certain activities at night.

• Parking Limitations: If customers rely on parking, ask if local restrictions apply.

Follow-Up Point:
If the landlord is aware of local quirks, they should inform you. Confirm if compliance costs or additional steps are expected from you as the tenant.

Conclusion

Negotiating a commercial lease involves much more than agreeing on rent. By asking these 20 questions, you not only gather essential information but also demonstrate that you’re a cautious, informed tenant who understands the implications of the agreement.

Each question serves a purpose, from verifying who bears maintenance costs to understanding rent review mechanisms, ensuring flexible exit strategies, and confirming what happens at lease end. The goal is to emerge from negotiations with an arrangement that supports your business, reduces unpleasant surprises, and fosters a stable, transparent landlord-tenant relationship.

As you ask these questions, consider seeking professional legal and property advice. A solicitor can help interpret landlord responses, recommend beneficial amendments, and ensure the final lease aligns with your interests. By the time you sign, you’ll know exactly what you’ve agreed to, setting the stage for a productive and hopefully profitable tenancy.