Commercial property lease: retail unit or shop

This retail lease has been drawn for letting a shop that does not require provisions for service charge recovery. The unit may be one of a row of shops, with or without high street frontage, or stand-alone. It may be just a retail space or it may have offices or other business space attached as well. The shop could be used for any purpose: retail of goods, restaurant, cafe or services. Features: term: 1 to 30 years; guarantor; break provision; rent review options; option for assignment; sub-letting option; ss 24-28 opt-out; draft authorised guarantee agreement; draft agreement for security deposit; drawn for experienced property professionals.

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About this document

This lease should be used to let a shop or retail unit that does not share services or facilities with neighbouring units owned by the same landlord. Therefore, provisions for service charge recovery are not required and not included. The shop itself maybe part of a parade of other shops owned by other landlords, or it may be stand-alone.

The tenant could use the shop 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 space used by the tenant for other business purposes, such as offices, storage or a commercial kitchen. This lease does not cover additional space used for residential use by the tenant, although Net Lawman does provide one that does (see below).

The landlord is likely to be an experienced property developer or an institutional real estate investor. This retail property lease has been designed to maximise the capital value of the let property and to provide acceptable security to a financial institution. As drawn, the interest of the landlord always comes first.

Similar lease agreements

If the shop being let is part of a parade owned by the same landlord, or uses shared facilities and services, use Commercial property lease: shop or retail unit in parade. This lease contains service charge recovery provisions.

If the tenant will also live at the property, use Mixed use property lease: shop or commercial unit with residential space.

If the property will be used as an office (rather than a shop), Commercial property lease: office building may be more appropriate.

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 template can be summarised as:

  • term between 1 and 30 years, that is, any usual commercial term (short-term by default)
  • for long term leases that require registration, prescribed lease clauses (PLCs) can be added easily
  • guarantor
  • the shop is a self contained unit
  • suitable for leasing a shop, a restaurant, a cafe, or customer facing service provider (e.g. travel agent)
  • sub-letting and assignment clauses
  • break provision
  • rent review options
  • opt-out of Sections 24-28 of the Landlord and Tenant Act 1954 (to exclude security of tenure)
  • draft authorised guarantee agreement: enables you to use the opt-out provisions of the 1995 Act
  • template for a Security Deposit Agreement

This lease is one of a collection of commercial lease templates designed for use by property professionals: experienced landlords, solicitors and surveyors. Accordingly, the provisions are very thorough.

If you are not familiar with commercial property leases, you may wish to look at the standard version of our shop lease agreement. The standard version contains fewer of the technical aspects such as a draft authorised guarantee agreement, fewer landlord's warranties, no references to prescribed lease clauses and no options for sub-letting.

Within the extensive guidance notes to this lease, we have provided a discussion on use of security deposit agreement and a template for such an agreement.

We have also included the forms required to exclude security of tenure. These include the prescribed notices to be given to the tenant 14 days before the new lease is created, a declaration of a new lease, and the statutory declaration if less than 14 days notice is given.

The law in this lease

Commercial lease law is regulated primarily by the Landlord and Tenant Act 1954, amended many times. Account has also been taken of:

  • the Landlord and Tenant (Covenants) Act 1995;
  • 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 tried to comply with the codes but nevertheless, have preferred the interest of the Landlord where there may be a difference.

Lease contents

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

The contents of the lease include 28 provisions and 3 schedules covering:

  • rent: amount, other payments, interest on overdue rent, periodic review
  • condition and repair of the shop or retail unit
  • alterations with landlord's consent
  • tenant's positive obligations
  • restrictions on tenant
  • assignment of the lease
  • sub-letting
  • preconditions for further development
  • indemnities by the tenant and warranties by the landlord
  • land registration
  • security deposit
  • insurance
  • access for landlord
  • guarantor
  • termination: default notice by landlord; provision for premature termination
  • forfeiture
  • security of tenure excluded
  • Schedule 1: rights reserved
  • Schedule 2: draft authorised guarantee agreement
  • Schedule 3: security deposit agreement
  • Prescribed notices to be sent to tenant to exclude security of tenure

If the term of your retail lease is for more than seven years, it must be registered with the Land Registry. We provide prescribed lease clauses (PLCs) for long term leases free of charge for download here: prescribed lease clauses. There are instructions on how to add these to your retail lease within the document. There is no need to use these if your intended lease term is seven years or shorter.


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

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