Before you sign anything, run the numbers
Commercial lease problems can begin before the lawyer reviews the draft. When the legal terms and the design brief are treated as separate workstreams, one for the solicitor and one for the interior designer, the team may overlook conflicts until the programme has already slipped. This guide treats the lease as part of the design brief and works through costs, break clauses and fit-out planning in a practical order for a founder or growing team, starting with the numbers and ending with the exit terms.
Calculate the true rent first
The headline rent on a marketing brochure may not capture the full occupancy cost. Before negotiations start, investigate the following four areas and ask which charges apply to the particular space.
Service charge needs its own review. Ask which common-area, lift, security and building maintenance costs it covers, whether there is a cap, and how the landlord reconciles estimated and actual spending. Request the last 12-month reconciliation alongside the current budget. Treat an informal quote as a starting point, not a fixed commitment. Raise any proposed cap before agreeing heads of terms, while you are comparing the full package, rather than leaving the question until the commercial terms are settled.
For business rates, ask the adviser handling your occupancy budget to confirm the premises’ assessment and the amount you should allow. Check whether any small-business relief applies in the property’s jurisdiction and to your circumstances. Budget from that answer rather than assuming a relief mentioned for another office will also apply here.
Ask whether building insurance is recharged separately and what the proposed lease says about the amount. VAT is another question for your accountant: does it apply to the quoted rent and other charges, and can your business recover any of it? Get the treatment confirmed for this transaction before comparing properties. A figure shown without VAT isn’t enough to establish what the space will cost your business.
Run these four numbers before you table a counter-offer on rent, ideally with input from whoever is managing the fit-out budget. You may find the landlord’s headline figure is actually acceptable once you’ve negotiated the service charge cap, but you can’t know that until you’ve built the full cost picture.
The rent-free period is a fit-out tool, not a favour
If the landlord offers a rent-free period, test it against your fit-out programme. A marketing figure may look attractive without covering the time your team expects to need before it can use the space.
The rent-free period should be calibrated against your fit-out timeline rather than accepted as a flat figure. A useful starting principle is to align the rent-free period with however long your Cat B fit-out is realistically expected to take, plus a handover buffer for the practical delays that can arise during a project: delayed landlord consent, supply chain lead times, M&E snagging.
Accepting a shorter rent-free period means you’re paying rent on a space you can’t occupy yet. That’s a real cost, and it’s often significant enough to affect whether the fit-out budget is viable at all.
Understand the rent review mechanism before committing to a budget
Rent-review mechanisms vary, so read the proposed clause rather than assuming it follows a market norm. Ask the solicitor and surveyor to explain the review dates, valuation basis, assumptions, dispute process and whether the result can move down as well as up. For a multi-year occupation, this deserves as much attention as the initial rent.
Model more than one outcome at each review point before committing to the current figure. You can ask whether a fixed or capped uplift is available, but do not assume the landlord will agree. Compare any certainty gained with the other commercial terms, and make sure the finance team understands the maximum exposure permitted by the final wording.
Break clauses: why the wording matters more than the date
If you need a right to leave before the end of the term, ask your solicitor whether the proposed break clause provides it on workable terms. Have them identify the notice requirements and any conditions that could prevent you from using it. Treat this as a process to plan, rather than simply adding a date to the calendar.
Pre-conditions differ between leases and may address payment, compliance, occupation or the condition of the premises. Ask a solicitor to explain each condition and the evidence needed to show that it has been met. Do not copy a checklist from another lease, since apparently similar wording can create different obligations.
If the business is relying on a break as its exit route, manage it as a project well before the notice deadline. Review compliance, payment records, occupation and proposed hand-back work with the relevant advisers. Get legal advice on the form and service of the notice as well as the steps required before the break date.
The break clause is also a fit-out timing issue. If your break falls partway through the term after a significant Cat B fit-out, you need to understand whether the dilapidations obligation means you’ll be stripping it out before you leave.
Cat A, Cat B, and the dilapidations trap
This is where lease economics and office design collide most directly.
Ask what the landlord means by Category A and what the tenant’s Category B work will include. Check the handover specification for lighting, raised floors, HVAC and fire detection rather than relying on a label. Separately list the partitions, branding, meeting rooms, furniture and finishes you plan to add. This is where the design budget needs a clear boundary: what is already included, what you are paying for, and what might need removing on exit?
Ask the solicitor and surveyor to identify the repair and reinstatement obligations in the lease and any fit-out consent. Would your Cat B work need reversing at your cost, and what would that mean for the investment? Discuss a schedule of condition, including photographs and a written record, and whether it needs to be incorporated into the agreed terms to serve the purpose you intend. Don’t assume that commissioning a record alone limits your obligations. Explore reversible design options with the designer: demountable partitions, floor boxes and modular joinery may be worth comparing with harder-to-remove alternatives. Include the likely hand-back work in the budget before settling on the design.
When investigating a private leased office across the UK, confirm with the provider which locations and services are available and how the commercial terms compare. Ask who handles the fit-out and exit questions above, rather than assuming that a particular route to finding space removes those risks.
EPC compliance is a design constraint, not a back-office issue
Ask your property advisers which energy-efficiency requirements apply to this building and lease in its UK jurisdiction. Have them check the current EPC, any relevant exemptions, and whether the planned occupation or works raise a compliance issue. Don’t assume that a rule or deadline discussed for a different property applies here; make this part of the same due diligence exercise as the lease review.
Resolve those scope questions early with suitable advisers. For an ambitious fit-out, energy performance deserves attention before the architect starts drawing. If the scheme includes new HVAC, lighting or significant mechanical and electrical work, reconcile the energy strategy with the lease, required approvals and the landlord’s plans at the earliest stage.
Check the EPC before you enter heads of terms. Understand whether your planned design works might push the rating in the wrong direction, and whether the landlord has any obligation to fund energy improvements.
Permitted alterations: where design drawings go to die
Ask the solicitor to identify the alterations regime: which changes are allowed, which need consent, and which the lease prohibits. Give particular attention to proposed structural changes, M&E work and anything affecting floor-loading limits. Have the design team work from those answers rather than assumptions about what an office tenant can change.
Briefing your architect without that review risks avoidable redesign. Before drawings are developed around partition removal, core drilling or raised-access changes, ask what consent would be needed and how its timing affects the programme. Discuss how unauthorised works could affect the exit position with your solicitor, and keep a written record of any consent granted.
Also ask the solicitor to review the permitted use clause against your actual operations. Describe any planned activities beyond desk-based office work, including retail, assembly or light industrial work, so the review addresses what you intend to do. Ask whether the lease or planning position needs changing before the design programme starts, rather than relying on the broad description ‘office use’.
Year-one costs that teams consistently miss
If a rent deposit is requested, obtain the proposed terms as part of the cost review. Ask how it will be held, when it can be repaid, whether any interest accrues in your favour and what could trigger a top-up. Include the agreed amount in the cash-flow forecast rather than counting only the first rent payment.
Ask the solicitor and accountant which lease transaction taxes apply in the property’s UK jurisdiction, how they would be calculated and when any return or payment is due. Include the adviser-confirmed figure in the completion budget rather than relying on a rough estimate or waiting for the final invoice.
Together with the VAT position, fit-out costs, and legal fees, these year-one items can add a substantial amount of additional cash outlay on top of the rent deposit. Build them into the financial model before heads of terms, not after.
Finally, ask your solicitor what renewal rights, if any, attach to this lease and whether any proposed exclusion changes that position. Don’t assume you can remain at term end because you have invested in the fit-out. For a team planning a branded workspace and a long-term presence, the answer affects how much it makes sense to invest. Raise it alongside the other exit questions before committing design resources.
The lease is the design brief. Read it that way, with a solicitor and designer working from the same document, and the fit-out decisions become far easier to make, well before the first drawing is produced.
