How to understand and review a lease before you sign

Check that the named landlord is the actual legal owner or an entity with authority to grant the lease. If the landlord is a company, note that you may have no recourse against the people behind it beyond that company's assets. On the tenant side, if the lease is in a company name, ask whether a personal guarantee is being demanded, because that quietly makes an individual liable for the whole term.

The 'demised premises' is the exact space you are getting. In a flat or unit it should be defined by reference to a plan, and it should be clear whether it includes parking, storage, a garden, a basement or a share of common parts. In commercial leases, whether the demise stops at the internal plaster or runs to the structure changes who repairs what, so read this alongside the repairs clause, not in isolation.

The term is the length of your commitment, and unless there is a break clause, a fixed term binds you for the whole period even if your circumstances change. Distinguish the contractual term from any renewal right. A renewal option that is genuinely yours to exercise is valuable; vague language that the lease 'may be renewed by agreement' gives you nothing enforceable.

'Holding over' is what happens when you stay on after the term ends without signing a new lease. Understand the default: in some jurisdictions and leases you slip into a periodic (rolling monthly) tenancy on the old terms, while a commercial lease may impose a higher 'holdover' rent, sometimes at a punitive multiple. Know which applies before the term runs down.

Confirm the rent amount, the frequency, the payment method and the date it falls due, and whether it is stated inclusive or exclusive of tax, utilities and other charges. The critical question is not today's rent but the mechanism by which it changes. Look for the exact trigger and formula.

Increases usually work one of a few ways. A fixed uplift (say a set percentage each year) is predictable but compounds: 5% a year is roughly 28% higher after five years, not 25%, because each rise builds on the last. An index-linked review ties the rent to inflation such as CPI or RPI, which protects the landlord against inflation and can move sharply in a high-inflation year. A commercial 'open market' or 'upward-only' rent review resets the rent to market level at fixed points, and 'upward-only' means it can rise or stay flat but never fall, even if the market has dropped. Model the worst case over the full term before you sign, not just year one.

For residential lettings, one to two months' rent is a common deposit range, and many jurisdictions cap the amount by statute and require the deposit to be held in a government-approved protection scheme, with penalties on the landlord for failing to protect it. Check that your deposit will be protected and that you will be told where. Commercial deposits ('rent deposits') are typically larger, often three to six months, held under a separate deed, and are not covered by residential protection schemes.

The grounds for deduction matter as much as the amount. A deposit should cover genuine damage beyond fair wear and tear, unpaid rent and cleaning to the standard at check-in, not ordinary ageing of carpets and paint. Insist on a dated, photographed inventory or schedule of condition at the start; without it, disputes at the end come down to your word against the landlord's, and you lose.

A break clause is your right to end the lease early on a set date or dates, on notice. It is the single most valuable term to get right in a longer lease. The danger is in the conditions attached to it. Many break clauses only operate if the tenant has paid all rent, given the correct notice in the correct form to the correct address by the exact deadline, and, in commercial leases, given 'vacant possession' with 'no material breach' of any covenant. Courts have upheld landlords defeating a break because the tenant left a few items behind, underpaid by a small sum, or missed a technicality.

Read the conditions as strictly as a court will. Ideal is a break conditioned only on paying the basic rent up to the break date and giving vacant possession, nothing more. Push back on any condition requiring you to have complied with all covenants, because that hands the landlord an easy route to trap you in the lease.

Who repairs what is often the largest hidden liability in a lease. A 'full repairing and insuring' (FRI) lease, standard in commercial letting, puts the entire burden of repair on the tenant, including the structure, roof and exterior, and 'repair' can extend to putting the property into a better state than it was in when you took it. An 'internal repairing' obligation limits you to the inside. The gap between the two is potentially enormous.

For commercial premises, tie the repairing obligation to a photographed schedule of condition agreed at the start, so you are not liable to hand back the property in better condition than you received it. This directly controls 'dilapidations', the claim a landlord makes at the end of a commercial lease for the cost of repairs and reinstatement, which can run to a large sum arriving just as you leave. Residential tenants generally cannot be made responsible for structural repairs, and in many jurisdictions the landlord's core repairing duties are fixed by statute and cannot be contracted out.

In any multi-occupied building, flats or commercial units alike, a service charge recovers your share of the cost of maintaining common parts, structure, lifts, security and shared services. The problem is open-ended exposure. Read how your share is calculated, what the landlord can recover, and crucially whether there is a cap on the annual amount or its year-on-year increase.

Look for a service charge cap, exclusions for improvements dressed up as repairs, and a right to see the accounts and challenge them. Residential service charges are often regulated: many jurisdictions require costs to be 'reasonable' and properly consulted on, and give tenants a statutory right to challenge unreasonable charges. Commercial service charges are governed mainly by the lease wording, so the cap and the list of recoverable items must be negotiated in.

The permitted use clause defines what the premises may be used for. In a home, watch for blanket bans or conditions on pets, smoking, running a business from the property, or making alterations. In a commercial lease, the permitted use should be wide enough to cover your business plan and, ideally, whoever you might one day sell or assign the lease to; a narrow use clause reduces the value of the lease to a future buyer. Also check for restrictions in the wider building or estate that limit your hours, signage or access.

Absolute prohibitions ('shall not') are stricter than qualified ones ('shall not without consent'). Where consent is required, the best position is that the landlord's consent 'shall not be unreasonably withheld or delayed', which gives you a right to challenge an arbitrary refusal.

Assignment means transferring the whole lease to someone else; subletting (underletting) means renting out part or all while you remain liable to your own landlord. These are your main exit and flexibility routes if there is no break clause, so the consent regime matters. An absolute bar on assignment and subletting is restrictive; a bar 'without the landlord's consent, such consent not to be unreasonably withheld' is far better.

In commercial leases, watch for an 'authorised guarantee agreement', where on assigning the lease you guarantee the performance of the person you assign it to, keeping you on the hook after you have left. Understand any conditions the landlord can impose on consent before you rely on being able to get out this way.

Establish who insures the building and who pays for it. Commonly the landlord insures the structure and recharges the premium to the tenant, in whole in a single let or by proportion in a multi-let building, so read the insurance clause together with the service charge. Check what is covered, whether you are liable to make up any shortfall or excess, and what happens to your rent if the building is damaged and unusable. A 'rent suspension' or 'rent cesser' clause that pauses rent while the premises cannot be used after an insured event is an important protection to have; its absence is a red flag.

'Forfeiture' (or re-entry) is the landlord's right to end the lease and take back the premises if you breach it, most often for non-payment of rent. Understand what triggers it, whether the landlord must give notice and an opportunity to put things right first, and whether you have a right to 'relief from forfeiture' from a court. Residential eviction is usually tightly controlled by statute with mandatory notice periods and a court process, and a landlord who bypasses that process is generally acting unlawfully. Commercial forfeiture can be far quicker, which is why paying on time and curing breaches promptly matters more.

Check the remedies running both ways: interest on late rent, the landlord's costs of enforcement, and whether you have any remedy if the landlord fails to perform, for example to repair common parts. Leases are frequently one-sided on remedies, so it is worth asking for balance.

This is a commercial-only point with major consequences. In some jurisdictions, business tenants have a statutory right to renew their lease at the end of the term ('security of tenure'), unless the lease is deliberately 'contracted out' of that protection by an agreed procedure before signing. If your lease is contracted out, you have no automatic right to stay when the term ends and must leave unless the landlord chooses to offer a new lease, possibly at a higher rent.

Find out early whether the lease is inside or outside this protection, because it changes the value of the deal and your negotiating position entirely. Residential security is a different regime, generally set by statute according to the type of tenancy, and again cannot be signed away by wording that contradicts the law.