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Getting into a negotiation with your landlord can be daunting, especially if you feel that they hold all the power. However, it is good to note that a landlord is usually happy to negotiate. This is because they usually do not have a large list of quality tenants to choose from. Negotiating with your landlord will allow you to get a better deal and get more out of your lease for your business. This article will outline: 

  • what the key terms are in a lease agreement; and 
  • how you should negotiate them. 

What is Negotiation?

A negotiation is a form of discussion with another party. Its objective is to get to an agreement with the other party. There are different types of negotiation, and it is a useful skill. In your context, you can use negotiation to get better terms on your lease or rental agreement.

What Should I Do Before I Negotiate?

You should always make sure that you know what is best for your business before you negotiate with your landlord. You need to know what your limits are and what you can and cannot afford. There is no point in going into a negotiation if you do not know what you need or what is going to give your business the best chance of success. Suppose there is a particular term that you want to be changed. Then you should make this clear from the start of your negotiation for the best chance of the landlord including it in your agreement

Rental Fee

The main term that you can negotiate with your landlord is the rental fee. This is the amount you pay to rent or lease the property. Usually, rent will increase periodically, but the amount it increases by is what you can negotiate with your landlord. Negotiating a lower rental increase is beneficial to your business as it lowers your costs. 

You could also negotiate how often you pay your rent. For example, you may find it better for your business if you pay your rent monthly rather than weekly or fortnightly. 

Length of the Lease

Another term you should consider is how long your lease is. This will also determine how often you need to renew your lease. If you project that your business will be best suited at your current premises for a long period of time, then you should ask your landlord whether you can lock this in for that amount of time. Your landlord is likely to reciprocate as it guarantees a tenant and a steady flow of income for years to come.

However, it is important that you are sure that you will be happy leasing the property for such a long period of time. This is because once you are bound to a contract, you cannot get out of it unless you have the mutual consent of your landlord.

Including a Termination Clause

A termination clause is a provision that allows you to cancel your agreement in particular circumstances. This is especially important if you are in a long term lease. This is because it allows you to cancel the agreement if your circumstances change. However, there will likely be a termination fee involved if you wish to terminate the agreement. 

It is also important to remember that your landlord can also make use of the termination clause if they meet the terms in the provision. This means they may be able to kick you out of your premises with sufficient notice. 

Assignment of the Lease

If you do not want to terminate the lease, you should include an assignment clause in your lease. This allows you to transfer the agreement to someone else. This benefits both parties as you can get out of your lease, and the landlord still has a tenant who pays a steady flow of income. 

Make sure that your lease agreement allows for assignment before assigning it. If it does not, you could be liable for breach of contract.

Key Takeaways 

Negotiating your lease agreement is an important aspect of ensuring that you have a successful business. It allows you to get better terms, so your business can save costs and grow. If you are a good tenant or have a good reputation, your landlord is likely to reciprocate any negotiation demands as long as they are reasonable. Your negotiation should be strong but do not push too far if you feel your landlord will not change their mind. 

Some of the terms you should negotiate to include your rental fee and the length of your lease. You should also negotiate how you can end your lease, whether this is through termination or assignment. If you need any legal assistance with commercial leases, contact LegalVision’s contract lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

Can a negotiation go badly?

Like with any business decision, things can go badly. However, it is unlikely that anything will go badly if you are reasonable with your dealings.

Can I always assign my lease?

No, you must get permission from your landlord before you assign a lease.

Is there any situation where I shouldn’t negotiate with my landlord?

Unless you have already signed a contract, you should always negotiate with your landlord.

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