Commercial Leases: Permitted Use of Premises

Commercial leases will always include a ‘permitted use of premises’ clause. This is an important element of the lease for both landlord and tenant, as it sets out exactly how a commercial property may be used. In this article we take a closer look at the permitted use of premises, highlighting information you need to be aware of.

Permitted Use of Premises Clause

A ‘permitted use of premises’ clause dictates what purpose the commercial premises may used for, thereby allowing the landlord to control the way their property is utilised. This will therefore limit the tenant, as he/she may only employ the premises for a function approved by the landlord. If the tenant does subsequently wish to use the property for another purpose (which is not stated in the terms of the lease), it will be necessary to obtain written permission from the landlord.

Permitted Use of Premises – Things a Tenant Should Know

In Scotland, the terms of the lease are considered to be a legally-binding contract. There is little in the way of legislation to protect a tenant once it has been signed. That is why tenants in particular must take care to safeguard their interests, or they could fall victim to the terms of the lease.

When considering the permitted use of premises clause, tenants need to remain cautious of the following factors:-

Negotiations are key
Identify exactly what purpose you wish to use the premises for. You must then negotiate with the landlord to ensure these elements are included within the terms of the lease. Otherwise you will be forced to seek permission later down the line, which could prove costly. You request may even be rejected. A solicitor can help you negotiate the terms of the lease.
The need for planning consent
As well as seeking approval from the landlord, a tenant must also remember that he/she may need planning permission. For example, if you wish to enter into a lease for a retail unit, which you then intend to turn into an estate agent office, you need to check with the necessary authorities that this is acceptable.
Positive obligations
There are occasions in which a landlord will demand a tenant use the premises for a particular purpose. For example, a tenant may be told he/she is required to operate a specific trade, such as a financial service. This could be extremely restrictive for a business, as innovation and expansion will be hindered.

Legal Help in Edinburgh

If you would like any legal assistance with regards to your commercial lease, contact us at McKay Norwell today. Whether you are a landlord or a tenant, our specialist commercial property lawyers will provide professional advice and expert legal services.

Simply call us for a free assessment immediately on 0131 222 8000 or complete the enquiry form on the right of this page and we will be delighted to help you.