Shop and Restaurant Long Leases for more than Five Years

Most retail and restaurant businesses occupy their premises under a Lease. A Lease gives the Tenant exclusive use of the premises for a specified term, subject to the Tenant paying the rent and complying with the provisions of the Lease.

This subfolder of Leases for more than five years contains a selection of templates for lettings of retail or restaurant premises. There are Leases of part (with service charge) and Leases of whole. All of the Leases contain rent review provisions as well as detailed covenants as to what a tenant must and must not do during the term. These provisions aim to protect the value of the Landlord’s reversionary interest in the premises.

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Frequently Asked Questions

Why does a long shop lease include rent review when a short one does not? +

Because a rent fixed now will fall behind the retail market over ten or fifteen years. Rent review lets the rent be reset at agreed dates, usually upward only to open market value, protecting the landlord's income. The Simply-Docs long shop and restaurant leases of more than five years include review, unlike the short lease range. The review dates, the valuation basis and the dispute mechanism all shape the reviewed rent, so they are worth getting right at the start.

Must a shop lease granted for fifteen years be registered? +

Yes. A lease granted for a term of more than seven years must be registered at HM Land Registry, so a fifteen year retail lease is comfortably within that requirement. Until it is registered the grant takes effect only as an equitable interest, giving the tenant weaker protection and complicating any later assignment or sale. The tenant usually registers within the priority period and pays the fee.

How is Stamp Duty Land Tax worked out on a long restaurant lease? +

SDLT on a new commercial lease is charged on the net present value of the rent over the whole term, not the annual rent, so a longer term produces a larger figure. No SDLT is due on the rent while the net present value stays under £150,000, then 1% applies to the excess. Any premium is taxed separately at non-residential rates. In Wales the tax is Land Transaction Tax with its own bands. Use the HMRC or Welsh Revenue Authority calculator for the precise figure.

Can my retail tenant renew a long lease when it expires? +

Yes, unless it was contracted out. A lease within Part II of the Landlord and Tenant Act 1954 gives the tenant security of tenure, so at the end of a long retail lease the tenant can stay and apply for a new one, and you can resist only on a section 30 ground such as redevelopment or your own occupation. If you want the unit back with certainty, the lease must be contracted out before it is granted using the warning notice and declaration procedure.

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All Shop & Restaurant Leases