Lease of Garage or Workshop (Complies with Lease Code)
This Lease of Garage or Workshop template is one of a number of five-year leases for industrial premises:
• Lease of Self-Contained Industrial Unit;
• Lease of Self-Contained Industrial Unit (Complies with Lease Code);
• Lease of Garage or Workshop; • Lease of Garage or Workshop (Complies with Lease Code);
• Lease of Industrial Unit on an Estate;
• Lease of Self-Contained Warehouse or Storage Unit;
• Lease of Self-Contained Warehouse or Storage Unit (Complies with Lease Code);
• Underlease of Part of Industrial Unit on an Estate.
There are also leases of other types of property and leases with longer terms. If you are not sure which lease is right for you, please consult the Industrial Leases Comparison Matrix.
This version of the Garage or Workshop Lease has been drafted so as to comply with the Code for Leasing Business Premises in England and Wales 2020 (‘the Commercial Lease Code’) (which replaced the voluntary Code for Leasing Business Premises in England and Wales 2007). The aim of the Code is to make the lease negotiations fairer and more efficient.
Landlords and/or agents who are members of, or who are regulated by the Royal Institution of Chartered Surveyors (‘RICS’) must comply with the Commercial Lease Code.
The Code contains mandatory provisions relating to the negotiation of the heads of terms of the lease which must be followed if the lease is to be code compliant. The Code also contains good practice provisions relating to break clauses, assignment, repairs, alterations and insurance, and this Lease incorporates those requirements. If there is a departure from these good practice requirements, RICS members or regulated firms may be required to justify their decisions.
This lease should be used to let a garage or workshop to a business tenant for a term of five years or less where the premises are self-contained, and the Landlord does not provide any services. Because of the short term, there are no rent review provisions. The Tenant’s right to security of tenure is excluded. Assignment of the whole of the Lease is permitted but underletting is prohibited.
There are optional break clauses.
Underletting is permitted under the Code but due to the short nature of this lease, this has not been included. The Code allows for stricter provisions regarding alienation to be imposed where justified by the circumstances (such as lettings of short duration).
This lease has Land Registry Prescribed Clauses at the beginning. These are not strictly necessary for a lease with a term of less than 7 years, but they are included as they helpfully record the main terms.
Prescribed Clause LR3 includes a field for an optional Guarantor. If there is no Guarantor, this field can be left blank, and Clause 10 (Guarantor’s covenant) should be deleted.
Prescribed Clause LR4 makes optional reference to a plan. It is strongly recommended that a plan is included so that the extent of the property is clear. The plan should as a minimum show with red edging the property that is being leased to the Tenant. The plan may also need to show the areas (if any) over which rights are granted to the Tenant in the First Schedule to the Lease if these areas cannot be adequately described in words.
In Clause 2 the Landlord grants the Lease to the Tenant. The Tenant must pay the Rent and an Insurance Rent (to reimburse the Landlord’s buildings insurance premium).
Clause 3 contains the Tenant’s covenants. These cover matters such as payment of utilities charges, repair, decoration, safety, the Landlord’s rights of entry, use, alterations, alienation (assignment and underletting), indemnity and payment of Landlord’s costs.
Clause 4 contains the Landlord’s covenants. These cover quiet enjoyment (the Tenant’s right to use the Premises without interference from the Landlord) and insurance.
Clause 5 contains various standard lease clauses including forfeiture and suspension of rent if the Premises are damaged so as to be unfit for use.
Clause 6 deals with service of notices by the Landlord and Tenant.
Clauses 7 and 8 contain optional break clauses (termination rights) for the Landlord and Tenant. These clauses should be amended or deleted as appropriate. The Tenant’s break option is conditional on rent having been paid up to date, the Tenant giving up possession of the Premises (i.e., vacating) and the Tenant not leaving any underleases in place. If these conditions are not satisfied, the Tenant’s break will not be effective, and the lease will continue. If the Tenant is in breach of other terms of the lease, e.g., necessary repairs have not been carried out, the break will be effective but the Landlord will retain the right to sue the Tenant for any breaches of the lease.
Clause 9 deals with exclusion of security of tenure. Reference should be made to the Guidance on Excluding Security of Tenure and the associated forms.
The lease must be executed as a deed. Various types of execution clauses are included, and the parties should choose the appropriate clauses.
The First Schedule sets out the rights that the Tenant has to use other property. These rights should be checked carefully and amended or deleted to suit the circumstances.
The Second Schedule sets out the rights that the Landlord has in respect of the Premises, including rights of entry and the right to carry out work to neighbouring property. If any additional rights are required, they should be added to the Second Schedule.
The Third Schedule has a set of regulations the Tenant must comply with. Under Clause 3.1.32 the Landlord has the right to make further regulations from time to time for the better management and control of the Premises.
Optional phrases / clauses are enclosed in square brackets. These should be read carefully and selected so as to be compatible with one another. Unused options should be removed from the document.
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