What to Check Before Signing a Commercial Lease

3. Don’t Ignore the EPC Rating

Most businesses know they should check a property’s Energy Performance Certificate (EPC), but few stop to consider what it could mean for future costs.

A lower EPC rating can be a sign that the building will cost more to heat, cool, and operate. It may also indicate that energy-efficiency improvements will be needed in the future. The EPC won’t tell you everything, but when combined with historic energy usage, it can help build a clearer picture of the property’s likely running costs.

4. Clarify Repair Responsibilities

Not all commercial leases are the same.

Depending on the terms of the agreement, you could be responsible for maintaining everything from the heating system to the external structure of the building.

Before signing, make sure you understand who is responsible for:

• Heating and air conditioning systems
• Electrical installations
• Plumbing
• Windows and doors
• External repairs

Unexpected repair costs can have a major impact on occupancy costs, particularly in older properties.

5. Check What’s Included in the Service Charge

Service charges can add a significant amount to the annual cost of a property.

Ask to see a breakdown of what’s included, along with previous years’ accounts if available. This can help you understand whether costs have been stable or if large increases are likely in future.

If major works are planned, it’s useful to know about them before you commit to a lease rather than afterwards.

6. Consider Your Future Requirements

A property may suit your business today, but will it still work in three or five years?

Think about potential growth, additional staff, increased storage requirements, or new equipment. If the business expands, will the premises be able to accommodate it? Commercial leases can be difficult and expensive to exit early, so it’s worth taking a longer-term view before signing.

Example – what these additional costs might look like on paper

A property’s headline rent doesn’t always tell the full story. In one example, a 5,000 sq ft office space was advertised at £35 per sq ft rent, but additional costs included:

• Business rates: £13.62 per sq ft
• Service charge: £9.55 per sq ft

This brought the total occupancy cost to £58.17 per sq ft.

Another comparable office appeared more expensive at £72.50 per sq ft, but this price included business rates, service charge, building insurance, cleaning, maintenance and other occupier benefits. At first glance, the cheaper option looked like the better deal. However, once all costs and included services were considered, the price difference was much smaller than it initially appeared. This is why it’s important to understand exactly what’s included in the rent and compare the total cost of occupation rather than the headline figure alone.

Check for RPI-Linked Rent Reviews

Some commercial leases include rent reviews linked to the Retail Prices Index (RPI). This means your rent could increase during the lease term, even if market rents remain unchanged.

Before signing, check:

• How often rent reviews take place
• Whether increases are linked to RPI or CPI
• Whether there is a cap on future increases

Make Sure Energy Meters Are Live

If a property has been vacant for some time, the gas or electricity meters may have been de-energised to avoid ongoing standing charges.

Re-energising a supply can involve physical work by network operators and may cause delays when moving into the property.

Ask the landlord or agent:

• Are all meters currently live?
• Has any supply been disconnected or de-energised?
• Are there any costs or delays involved in reconnecting utilities?

Identifying these issues before signing can help avoid unexpected costs and delays when you move in.

Questions Worth Asking Before You Sign

Before making a final decision, make sure you know:

• What is included in the rent?
• How are service charges calculated?
• What are the average annual energy costs?
• What is the EPC rating?
• Who is responsible for repairs?
• Are any major works planned?
• Is there a break clause?
• Can the lease be assigned or sublet?
• Is the energy meter live?

If the answers aren’t clear, keep asking questions.

Final Thoughts

Taking the time to review energy usage, service charges, repair obligations, and lease terms before signing can help you avoid expensive commercial property surprises later. The more you understand about a property’s running costs from the outset, the easier it becomes to make an informed decision about whether it’s right for your business.

Need Help Understanding a Property’s Energy Costs?

Before signing a commercial lease, make sure you understand how energy costs could affect your budget.

At Utility Bidder, we help businesses review their energy requirements, compare contract options, and avoid paying more than they need to for electricity and gas.

Get in touch with Utility Bidder to discuss your business energy needs and compare available tariffs.