Sep
2
2026

Commercial Lease Renewals: What Businesses Need to Know Before Signing

An article by Rob

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Although leases usually have an automatic renewal provision, breaking that provision can be useful to businesses. You may lose the best new look deals and provisions, but you may be able to maintain whatever benefits served you best in the original draft. Inadvertently missing provisions or provisions that you could have negotiated may end up costing you more either in money or time.

Start the conversation early

Most leases give the lessee a renewal notice period that is typically six months to one year. Negotiating with the landlord at the last minute is unfair to you as the landlord is aware of your limited time to look for new opportunities. Starting the renewal negotiations early will give you a comfortable window to get the market data and negotiate patiently.

Check the rent against the current market

Like most residential leases, commercial leases renew on a market value basis. Businesses lease spaces for a lot less that would have been acceptable five years ago, but acceptable today for similar leases. A surveyor can give a market opinion on the value, and representing yourself may help with an improved deal.

Confirm break clause and renewal notice deadlines well in advance
Get an up-to-date view of market rent for comparable space
Review repair and dilapidations obligations from the outgoing term
Consider whether your space needs still match your business size
Negotiate rent-free periods or incentives, not just the headline rent

Understand service charge caps and increases

In many leases, landlords are able to increase service charges upon lease renewal. For this reason, it is essential to understand what landlords have charged in the past before agreeing to a capped or unlimited service charge. You should request a breakdown of service charge spending for the recent years. Review the breakdown and ask the landlord to explain any charges that don’t appear to be justified, taking into consideration the size and condition of the property. Landlords will often justify increases only if asked to explain.

Reassess whether the space still fits

A lease renewal is also an ideal opportunity to assess whether the business continues to use the premises in an optimal manner. Changes in working patterns due to hybrid working or changes in the size of the workforce may mean that the terms of the renewal lease do not serve the interests of the business. For example, a business may serve its interests better by negotiating a break clause after some years rather than renewing the lease on the same terms.

Do not underestimate dilapidations obligations

Even a decision to renew and remain on the same premises should be accompanied by an assessment of the landlord’s end of term property condition expectations, since dilapidations claims can be extensive and/or revised during a lease renewal. Renewing the lease provides an opportunity for the landlord to document the state of the property, including taking photos. The documentation helps the business avoid a claim for damage the property may have sustained prior to the business occupying the premises.

Use the renewal as leverage for other improvements

A renewal negotiation offers an opportunity to address issue that were too small to address during the previous term. For instance, addressing poor air conditioning or temperature insulation, or the situation of lifts and maintenance of common areas. Landlords are often more willing to address your concerns when they know you are considering whether or not to renew. It’s better to raise the issues before the final negotiations begin because the response tends to be more positive.

Get advice before you sign anything

Renewing a lease is legal and financial minefield that can be overwhelming. Getting professional help will save you money in the long run. Our firm offers free consultations for those considering lease renewals. Contact us to discuss the terms.