What is the usual length of each type of commercial lease?
There is no standard length. However, current market trends are for leases of between 5 and 15 years, although it is also common to find leases with shorter terms and/or with tenant's break options.
With effect from June 2000, no lease of any type of real estate can be granted for a period of more than 175 years.
On 28 November 2015 certain categories of long lease (in which the annual rent was not more than £100) were converted automatically into tenants' ownership by virtue of the Long Leases (Scotland) Act 2012. Leases which qualified for conversion into tenants' ownership were leases that (1) were originally granted for over 175 years; (2) in the case of residential leases, had over 100 years left to run from 28 November 2015; and (3) in the case of non-residential leases, had over 175 years left to run from 28 November 2015. In calculating the period for which a lease was granted, break options are disregarded, but landlords' obligations to renew are included. Mineral leases are specifically excluded from the provisions of this legislation. The legislation contains provisions under which landlords could, in the two-year period after 28 November 2015, claim (limited) compensation for loss of ownership.
There is a statutory implied condition in leases in excess of 20 years (subject to exceptions specified in the Land Tenure Reform (Scotland) Act 1974) that the property should not be used as a "private dwelling-house" (although this implied condition does not apply to private residential tenancies as defined in the Private Housing (Tenancies) (Scotland) Act 2016). In addition, leases of residential properties are subject to important statutory regimes relating to matters such as standard of repair, health and safety, and tenancy deposits.
With effect from June 2000, no lease of any type of real estate can be granted for a period of more than 175 years.
Rent for retail premises is sometimes based on business turnover. Depending on the location of the retail premises the tenant may incur further obligations relating to opening hours, servicing times, signage restrictions and other management controls. The landlord may also have the benefit of a pre-emption right in the event that the tenant proposes to transfer its interests under the lease. Hotel leases share some of these features with retail leases.
It is unusual to find office leases with a rent review based on anything other than open market rent.
The National Security and Investment Act 2021 applies to transactions entered into from 12 November 2020, introducing a mandatory and a voluntary notification regime for transactions which could affect national security and where a sensitive sector is involved (for example, defence). The legislation could cover the transfer of a leasehold interest or the grant of a new lease for a property which is, or is proximate to, a sensitive site, such as a government building or site of national critical infrastructure. However, little guidance has been given on the definitions of "proximate" or "sensitive". The regime will also cover foreign to foreign transactions with a UK element (such as an acquisition by one foreign investor of a data storage company in another country, if that company performs services which may impact on national security in the UK). Government approval would be required prior to completion of affected transactions and without it, the transaction would be void.