What payments other than rent are tenants obliged to make under a commercial lease?

As well as the basic rent, tenants must contribute towards the following;

  • Buildings insurance: Tenants must contribute towards the insurance arranged by the landlord. Tenants leasing a whole property will usually pay the entire premium, whereas tenants renting only part of a property will only pay some of it. In more complex properties, the proportion of the premium each tenant pays is usually worked out using the square footage of the area they are renting.
  • Service charge: This may also be payable if a tenant is leasing only the interior of a premises, or if the tenant is renting part of a larger building, business park or industrial estate. Service charges apply in these situations because the exterior, structure and/or any common parts (i.e. shared accessways, hallways, corridors or stairs) need to be maintained by the landlord, with the costs then divided amongst the tenants. Again, this is usually calculated using the floor area of the various let premises. 
  • VAT: This will be payable on the rent, service charge and insurance if the landlord is registered for VAT and has ‘opted to tax’ the property. 
  • Legal and surveyor costs: Tenants are responsible for the landlord’s legal and survey costs (including VAT) on any proposed assignment (transfer or sale) of a lease, subletting or alterations.
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