The Landlord and Tenant (Shops, Hotels and Catering Establishments) Act (Cap 301) imposes important protections for certain commercial tenants, but its scope is limited. Many commercial tenancies fall outside it and are governed entirely by the lease agreement and the general law of contract.
The Scope of Cap 301
Cap 301 applies to premises used as a shop, hotel, or catering establishment. For tenancies within its scope, a landlord cannot terminate a lease without a court-approved reason. For offices, warehouses, and industrial premises outside Cap 301, the relationship is governed entirely by the lease and the law of contract.
Rent and Rent Review
State the initial rent, the payment schedule, and the review mechanism. Common mechanisms include fixed percentage increases, CPI-linked increases, and open market reviews. An uncapped open market review can expose a tenant to significant increases. Negotiate a cap on each review.
Repair and Maintenance
Distinguish between structural repairs (typically the landlord’s obligation) and internal repairs (typically the tenant’s). Define the tenant’s dilapidations obligation at lease end. Yield-up in original condition can be expensive for a tenant who has made substantial improvements.
Alterations
Define what alterations the tenant can make without consent, what requires consent, and whether certain categories must be removed at lease end.
Assignment and Subletting
A prohibition on assignment without landlord consent is standard, but ensure the consent cannot be unreasonably withheld.
Break Clauses
A tenant break clause gives the right to terminate before contractual expiry on specified notice. Break clause conditions must be satisfied strictly.
Registration and Stamp Duty
Leases of three years or more must be registered at the Land Registry. Stamp duty is payable at prescribed rates based on the annual rent.
Negotiating or reviewing a commercial lease? Contact Clay & Associates Advocates for expert advice. Book a Consultation
