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Commercial landlords

A commercial landlord is a person or company that owns the freehold for a commercial property, but leases the property to a business.

The commercial landlord will usually grant a tenancy for around five to fifteen years and the tenant will pay rent which will usually be subject to review.

The commercial landlord and the tenant will often enter into lengthy negotiations before the lease is granted and any grant of a lease is likely to be subject to restrictions on assignment of the lease or subletting.

Tenant benefits of having a commercial landlord

The tenant benefits from renting as it allows a certain amount of flexibility for the business, which would not be available if the business bought the freehold.

An example of the benefits of flexibility would be if the business were to expand quickly it may require bigger premises, or may find its current location is not suitable for the target market. In addition to this, the cost of buying freehold commercial premises for a new business is likely to be prohibitively expensive.

Understanding the lease

When the lease first comes into being, the commercial landlord grants the lease and this lease is known as the head lease.

If the tenant then wants to grant a lease to another person they may, subject to restrictions in the agreement. This second lease would be known as the sublease.

If the freeholder, the holder of the head lease or the holder of the sub-lease wish to sell their interest in the land to another person, they may, but subject to restriction in their agreements. This process is called assignment.

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