Buying a leasehold shop

Buying an existing retail business can be a sound commercial move as it often means you have immediate access to customers familiar with the shop’s brand and location. However, in these situations you will often be taking over a leasehold premise and it can be easy to overlook some of the potential complications and costs that can arise.

There is no such thing as a ‘standard commercial lease’; leases often have bespoke clauses drawn up to suit the landlord. However, a common theme is that commercial leases often impose relatively onerous obligations on tenants in relation to alterations and repairs. For example, the lease may require you, as the new tenant, to repair any defects to the property when you take it on, even if the landlord is already aware of those defects. In addition, if the current owner has made alterations and modifications to suit the business you are buying, then the lease may oblige you to remove these at your own expense as and when you terminate your lease.

Finally, the buyer will usually have to pay the landlord’s costs for their consent to transfer the lease. All this means it is really important to use lawyers with experience of commercial property and business transactions. Involve them at an early stage so that you can be alerted to potential issues. That way you can factor in future potential costs when assessing the overall price you are willing to pay for the retail business. This helps avoid unexpected surprises and will help keep your negotiations with the seller on track.