FIVE RED FLAGS COMMERCIAL TENANTS SHOULD WATCH OUT FOR WHEN ENTERING A COMMERCIAL LEASE IN ENGLAND
Here are five major red flags commercial tenants should watch out for when entering a Commercial Lease in England.
1. Upward‑Only Rent Review Clauses – Rent reviews that only allow increases (never decreases) lock tenants into above‑market rents even if the economy dips.
2. Full Repairing and Insuring (FRI) Obligations – Tenants may be liable for costly structural repairs and insurance, even for pre‑existing defects.
3. Restrictive Break Clauses – Break clauses often have strict conditions (e.g., notice periods, penalties). If not carefully drafted, they can be impossible to exercise.
4. Alienation/Subletting Restrictions – Clauses that severely limit assignment or subletting can trap tenants in a lease they can’t exit if business circumstances change.
5. Excessive Service Charges or Dilapidations – Hidden or uncapped service charges, plus onerous end‑of‑term dilapidations obligations, can create unpredictable financial burdens.
Why do these matter?
Rent Reviews: Without caps or downward flexibility, tenants risk unsustainable rent hikes. This could severely affect your business being run from the premises.
Repair Obligations: Full Repairing and Insuring Leases or "FRI" leases can make tenants responsible for roofs, foundations, or external works they don’t control. Again this means more financial burden for you or your business operating from the leased premises.
Break Clauses: If conditions are too strict, tenants lose the ability to exit early, even in hardship. Here you have to be super careful and if you are looking to break your lease then you must seek professional advice from a qualified legal professional as these clauses can be very tricky and must be complied with for the break to be valid. If you do not exercise the break correctly then you are stuck with the lease for the remainder of the term and will obligated to continue to pay rent and other payments under the lease.
Alienation: Restrictive clauses prevent subletting or transferring the lease, limiting flexibility.
Service Charges/Dilapidations: Lack of transparency or caps can lead to surprise bills for maintenance or reinstatement at lease end.
So make sure you understand the red flags before you enter a commercial lease and seek advice from a qualified legal professional before proceeding or it could turn out to be a real headache for you and your business financially.
If you like this short article then check out our book "A Commercial Lease Guide for Business tenants in England", this is a short easy to understand guide to the main issues a commercial tenant in England must be made aware of before they look to enter into a commercial lease. See link below on Amazon or click on the Home Page on this website and click to purchase this handy guide on Amazon in paperback or e-book format.
Amazon.co.uk : commercial lease guide uk
