Mixed use lease: shop in parade with residential space

This is a comprehensive lease for letting a shop or other retail unit with a flat or maisonette above for the tenant to live. The shop could be used for any purpose under Use Classes A1, A2, A3, and A5; for example: sale of goods, restaurant, cafe or sale of services (e.g. estate agency or PC repair). Term: 1-7 years. Features: service charge provision; guarantor; break provision; rent review options; option for assignment; sub-letting not allowed; ss 24-28 opt-out; draft agreement for security deposit.

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About this lease

This lease is for a shop with a flat over. The shop will usually be in a parade.

The tenant could use the commercial space for any purpose including:

  • conventional retail of goods
  • restaurant or cafe
  • provision of services such as PC repair or estate agency

The shop may or may not have additional rooms used by the tenant for other business purposes, such as offices or storage.

If the shop is not part of a parade, the relevant paragraphs can be deleted easily and obviously.

The lease has been drawn to prefer the interest of the landlord rather than the tenant.

Provided the term of the lease is seven years or less, it does not need to be registered at the Land Registry.

Similar commercial lease agreements

We offer two similar leases for shops where the tenant does not live at the property.

Use our Shop lease agreement if the shop does not share services or facilities with other neighbouring shops owned by the same landlord.

We sell another version of this lease, aimed at property developers, solicitors and surveyors, that contains some additional paragraphs covering more technical points. You might be interested in looking at: Mixed use property lease: shop or commercial unit with residential space if you need any of the following:

  • provisions for sub-letting
  • provisions for an authorised guarantee agreement
  • extensive landlord's warranties
  • references to land registration for leases with a term greater than 7 years
  • prescribed lease clauses

If you are still not sure, there is more information at Which Net Lawman Business Lease?

Key features

Plain English is used throughout except where it is necessary to use legal terms common in this field of law.

The key features of this lease template can be summarised as:

  • standard guarantor
  • tenant also lives at the property
  • options for transfer or assignment to another party
  • sub-letting forbidden
  • option to include a break clause for premature termination by the tenant
  • a choice of options for rent reviews
  • opt-out of Sections 24-28 of the Landlord and Tenant Act 1954

The law relating to this lease

The lease is regulated by the Landlord and Tenant Act 1954 and not the Housing Act 1988. The agreement includes an extensive menu of tenants' covenants to protect every aspect of the landlord's interest.

Account has also been taken of:

  • the Landlord and Tenant (Covenants) Act 1995;
  • Landlord and Tenant Act 1954
  • the Regulatory Reform Regulations 2003;
  • the Joint Committee's Code for Leasing Business Premises;
  • the RICS' Code on Service Charges.

In balancing the codes with the law and the interest of the Landlord, we have followed the codes where reasonable, but have preferred the interest of the Landlord where there may be a difference.

Document contents

This lease agreement is comprehensive, providing alternative choices for important decisions.

The contents include 32 provisions and 3 schedules covering:

  • rent: period, amount, other payments, interest on overdue rent, periodic review
  • condition and repair
  • tenant's positive obligations
  • tenant's obligations for residential space
  • service charge recovery
  • restrictions on tenant: prohibited activities on the property
  • signs and advertisements
  • assignment of the lease
  • indemnities by the tenant
  • security deposit
  • insurance
  • access for landlord
  • guarantor
  • termination: default notice by landlord; provision for premature termination (a break clause)
  • forfeiture
  • security of tenure excluded
  • Schedule 1: the service charge
  • Schedule 2: rights reserved
  • Schedule 3: draft agreement for a security deposit

Scottish version of this lease

The law governing commercial leases is substantially different in Scotland as compared with England, Wales and Northern Ireland. In Scotland there is no equivalent to the Landlord and Tenant Acts. There is little legislation or case law relating to leases in Scotland. So the version we have drawn for our Scottish user is common law based.

On registration of leases in Scotland, only commercial leases for longer than 20 years must be registered in the Land Register of Scotland. However, the lease is often registered in the Books of Council and Session in Edinburgh.

For the Scottish version of this lease please select "Scotland" from the list in top box.

Draftsman

This document was written by a solicitor for Net Lawman. It complies with current English law.

UK-PRlse16 - Mixed use lease: shop in parade with residential space

 
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