Commercial leases will always include a 'permitted use of premises' clause.
This is an important element of the lease for both landlord and tenant, as it sets out exactly how a commercial property may be used.
In this article we take a closer look at the permitted use of premises, highlighting information you need to be aware of.
Permitted Use of Premises Clause.
A 'permitted use of premises' clause dictates what purpose the commercial premises may used for, thereby allowing the landlord to control the way their property is utilised.
This will therefore limit the tenant, as he/she may only employ the premises for a function approved by the landlord.
If the tenant does subsequently wish to use the property for another purpose (which is not stated in the terms of the lease), it will be necessary to obtain written permission from the landlord.
Permitted Use of Premises - Things a Tenant Should Know.
The terms of the lease are considered to be a legally-binding contract.
There is little in the way of legislation to protect a tenant once it has been signed.
That is why tenants in particular must take care to safeguard their interests, or they could fall victim to the terms of the lease.
When considering the permitted use of premises clause, tenants need to remain cautious of the following factors:- * Negotiations are key.
Identify exactly what purpose you wish to use the premises for.
You must then negotiate with the landlord to ensure these elements are included within the terms of the lease.
Otherwise you will be forced to seek permission later down the line, which could prove costly.
You request may even be rejected.
A solicitor can help you negotiate the terms of the lease.
* The need for planning consent.
As well as seeking approval from the landlord, a tenant must also remember that he/she may need planning permission.
For example, if you wish to enter into a lease for a retail unit, which you then intend to turn into an estate agent office, you need to check with the necessary authorities that this is acceptable.
* Positive obligations.
There are occasions in which a landlord will demand a tenant use the premises for a particular purpose.
For example, a tenant may be told he/she is required to operate a specific trade, such as a financial service.
This could be extremely restrictive for a business, as innovation and expansion will be hindered.