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Commercial Property Leases

Commercial Leases

Long term/short term leases

Property is the pivot of civilization.

Leon Samson

Commercial Leases

“Commercial Leases are the life blood of commerce”

Commercial Leases are either classified as short terms (less than 5 years) or long term (more than 5 years).

In general if a tenant is in occupation of a business premises for over 5 years he is entitled to a new 25 year lease with 5 yearly market rent reviews. A long term lease can be sold or assigned, subject to the landlords consent. By granting a lease the landlord is in effect “selling” the property whilst obtaining a rental income. In contrast when a short term lease is finished, the property is normally handed back to the Landlord.

John Griffin Solicitor has over 25 years experience in providing comprehensive legal advice for both landlords and tenants.

John and his team welcome the opportunity to bring their experience to the process by becoming involved as early as possible in negotiations in order to advise on heads of agreement. Tenants sometimes agree heads of agreement without properly limiting their liability or fail to address issues such as break out clauses which are of fundamental importance to them. Practical early advice ensures that the “legal” end of the transaction runs smoother and completes quicker.

Traditionally short term leases were once off letting made for the temporary convenience of the landlord, where possession of the premises was returned to the landlord after a 3 year 6 month, or a 4 year 6 month period.

A long term lease is for at least 10 years but normally for 20 years with five yearly rent reviews. All rent reviews under leases created since 28th of February 2010 must be open market reviews either upwards or downwards depending on the state of the market. Long term leases are complicated because they involve a division of ownership between the landlord who receives a rent for the premises (and a five yearly rent review), and the tenant who is in possession of the premises, running a business, and responsible for repairing and insuring the building. Hence the term 25 years FRI Lease – Full Repairing Insuring Lease.

The reason for the distinction between short and long term leases is that a tenant who is in actual occupation of a business premises for over 5 years is entitled to claim a 25 years full Repairing Insuring Lease with five yearly rent reviews.

The distinction between long term and short term leases has been blurred somewhat by the right of a tenant to renounce their Landlord and Tenant rights. The distinction remains important as a short term letting agreement is a much shorter straight forward document of about 12 pages whereas a long terms lease is extremely comprehensive and runs to a minimum of 50 pages.

Long terms leases are comprehensive because although the landlord owns the property, he gives up possession to the tenant, and therefore seeks to secure his position by ensuring that the lease sets out his rights at length.

Normally the landlord’s covenants (e.g. quiet possession) will be contained in half a page, whereas the remainder of the document will set out in extensive detail the tenant’s obligations to the landlord. At the end of the 25 year lease – the tenant has a right to a further lease of 25 years, therefore theoretically the Tenancy never ends because the lease can be renewed again and again. The tenant has the right to sell on his interest in the lease subject to the landlords consent. The landlord is entitled to protect the quality of the covenant to pay given by the new tenant, but is not entitled to unreasonably refuse his consent to sale by the tenant. 

We at Griffin Solicitors provide practical legal advice for landlords and tenants in relation to long term and short term leases. We understand the importance of communicating with our clients and of “getting the job done” in an efficient and timely manner. John Griffin has 25 years experience and welcomes the opportunity to provide legal input and add value to the transaction. Ring or email John at 01 4907651 or email at [email protected] for a an initial consultation.


Ethna Ryan

Ethna Ryan

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