“The ten mistakes that cost tenants their leverage”
Most commercial lease problems aren’t discovered at signing. They surface eighteen months in, at rent review, or three years later when the tenant wants to expand into the space next door and discovers there’s no right of first refusal in the lease. By then, the leverage that existed before signing is gone.
Here are the ten mistakes that show up most often when business owners lease commercial property without a full review of the lease terms before committing.
1. Accepting the standard lease as non-negotiable
Landlords present a standard lease as if it’s fixed. Most terms are negotiable, particularly with a tenant who has genuine alternatives and isn’t afraid to walk.
2. Not confirming outgoings before signing
Outgoings can add a substantial amount on top of base rent, and vague or uncapped outgoings clauses expose tenants to costs that shift entirely at the landlord’s discretion.
3. Ignoring the make-good clause
Make-good obligations at lease end can be expensive and vague. Confirming exactly what condition the premises need to return to, and getting it documented with photos at lease start, avoids a costly dispute later.
4. Missing the rent review structure
Fixed annual increases, CPI-linked reviews, and market reviews all behave very differently over a five or ten-year term. Understanding which structure applies, and modelling what it means in year five, changes what’s actually being agreed to.
5. No option to renew, or a poorly worded one
A lease without a clear, tenant-favorable option to renew leaves a business exposed to relocation at the landlord’s convenience, often at the worst possible moment for the business.
6. Underestimating fit-out costs and ownership
Who owns the fit-out at lease end, and what happens to it, needs to be explicit. Tenants routinely discover late that improvements they’ve paid for become the landlord’s property without compensation.
7. Not checking permitted use clauses
A lease that restricts permitted use too narrowly can prevent a business from adapting or diversifying later, even within the same broad industry.
8. Skipping a building condition and compliance check
Fire safety, accessibility, and essential services compliance are the landlord’s responsibility in most cases, but confirming this in writing before signing avoids ambiguity if an issue surfaces later.
9. Not negotiating a bank guarantee or security deposit down
Landlords often ask for more security than is standard for the tenant’s risk profile. This is negotiable, particularly for an established business.
10. Signing without independent advice
The lease is drafted by, and generally favors, the landlord’s interests unless a tenant negotiates otherwise. Independent advice before signing, not after a dispute arises, is where the real protection lives.
A commercial lease shapes a business’s cost base and operational flexibility for years. The ten minutes it takes to negotiate these points properly is a small price against what an unfavorable lease can cost over its full term.
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