What the Lease Contains

Every lease is different, but they cover the same ground. The table below sets out the clauses a landlord should look for and what each one determines. These are the terms that decide what you are paid, for how long, and who does what if something goes wrong.

Parties

Who is granting the lease and who is taking it. Your name and the name of the government body. RentPromise is not named as a party.

Term

The start date and how long the lease runs. Once signed this is fixed, subject to any break clause.

Rent

The monthly figure, the payment date and the method. Fixed for the term unless the lease says otherwise.

Repairing obligations

Who repairs what. Under these leases the government body takes on the internal repairing obligation and the condition of the property.

Permitted use

What the property may be used for. Here, housing households the body has a duty to accommodate.

Insurance

Which party insures what. Buildings insurance normally remains the landlord's responsibility.

Condition and inventory

The recorded state of the property at the start, which sets the standard for handback.

Break clause

Whether either party can end the lease early, on what notice and in what circumstances.

Handback

The condition the property must be returned in and the arrangements for vacant possession.

Alterations

What the body may and may not change about the property during the term.

The two clauses landlords most often overlook are the break clause and the handback condition. The first determines whether you can get the property back early if your circumstances change. The second determines what state it comes back in and who pays to put it right. Read both carefully.

See lease terms in detail

How Long the Lease Runs

Terms typically run from one to five years. The length depends on the body taking the lease, the requirement your property is matched to and what you want. Longer terms give you a longer guarantee of fixed income. Shorter terms give you the option to review sooner. Both are available.

Local authorities and housing associations generally prefer longer leases, because a household they have placed needs stability and moving people repeatedly is expensive and disruptive. Five years is common. If you want a shorter term, say so at the offer stage and we will look for a requirement that fits.

Your rent is fixed for whatever term you agree. There is no annual review clause allowing the figure to be reduced partway through, and no mechanism for costs to be passed back to you during the lease. What you sign is what you receive for the whole period.

Choosing the right length

The question to ask is what you expect to want from the property in three to five years. If you might sell, might move back in, or might want to hand it to a family member, a shorter term or a negotiated break clause matters more than the extra certainty of a five-year commitment. Tell us at the outset and it can be built into the terms.

What You Keep and What You Give Up

Granting a lease transfers the right to occupy the property for the term, not the ownership of it. You remain the legal owner throughout and the property stays on your balance sheet. What changes is your day-to-day control over who is in it and what happens inside it.

You keep

  • Ownership and legal title
  • Any capital growth over the term
  • The right to sell, subject to the lease
  • Buildings insurance and its proceeds
  • The property at the end of the term
  • The right to be consulted on alterations

You give up

  • Choosing who lives in the property
  • Day-to-day access without notice
  • The ability to end the arrangement early, unless a break clause is agreed
  • Setting or reviewing the rent during the term
  • Direct dealings with the occupants
  • The highest possible market rent in a strong year

The right-hand column is the honest cost of the arrangement. If any line in it is something you are not prepared to give up, this is worth knowing before you go further rather than after the lease is signed.

Access to the property

You retain a right of access for inspection and for any works that remain your responsibility, on reasonable notice as set out in the lease. You cannot enter without notice, and you cannot use the property yourself during the term. That is the normal position under any lease and is not specific to this arrangement.

If Your Circumstances Change

A lease is a commitment for its term, and that is the point of it from the government body's side. But circumstances change, and the lease provides for some of that. What you can and cannot do depends on the clauses agreed at the outset, which is why the offer stage is the time to raise it.

If you want to sell

You can sell during the term. The lease continues and transfers with the property, so the buyer takes it on with the rent and the term as they stand. Some buyers see a long lease to a public body as an advantage, particularly investors looking for predictable income. Others want vacant possession, which the lease will not give them.

If you want the property back

Only if a break clause was agreed and its conditions are met. Break clauses usually require a set period of notice and can only be exercised at particular points in the term. If there is a realistic chance you will want the property back, negotiate a break clause before you sign rather than hoping to agree one later.

If you remortgage

Tell your new lender about the lease before you apply. A property let on a commercial lease to a government body is assessed differently from one on an assured shorthold tenancy, and not every lender will offer on it. This is manageable but it is not something to discover at the valuation stage.

If the property is damaged

Damage caused during the term is the government body's responsibility under the repairing obligation, and is dealt with by them. Damage from an insured event such as fire or flood is dealt with under your buildings insurance. RentPromise coordinates either way and keeps you informed throughout.

What Happens at the End of the Term

The lease ends on the date agreed and the property is returned to you with vacant possession. The government body is responsible for moving the occupants on and for returning the property in the condition recorded at the start, less fair wear and tear. RentPromise manages the handback process on your behalf.

The handback inspection

We inspect the property against the inventory and schedule of condition taken at the start of the lease. Anything outside fair wear and tear is identified and dealt with by the government body under the terms of the lease before the property is handed back to you.

Vacant possession

The property is returned empty. Rehousing the occupants is the government body's responsibility, not yours, and it is provided for in the lease. You do not need to serve notice on anyone, take possession proceedings or deal with the occupants at any point.

Your options at the end

  • Renew for a further term. We will bring you an offer based on the market at that point, and there is no obligation to accept it.
  • Take the property back and let it privately, or move back in.
  • Take the property back and sell it with vacant possession.

There is no automatic rollover and no penalty for declining a renewal. We will talk to you well before the end of the term so you have time to decide.

Read more about how your property is returned
FAQ

Questions About the Lease

No. It is a commercial lease between you and a local authority, housing association or the Home Office. An assured shorthold tenancy is granted to an individual or household who lives in the property. This lease is granted to an organisation that will use the property to meet a housing duty.

Yes. You are the landlord and the government body is the tenant. Both are named as parties. RentPromise is not a party to the lease and holds no interest in your property. We act as your agent in arranging and managing the arrangement.

Only if a break clause was agreed when the lease was signed and its conditions are met. Break clauses normally require a set notice period and can be exercised only at certain points. If you may need the property back, negotiate this before signing rather than afterwards.

Yes. The lease continues and transfers with the property, so your buyer takes it on with the rent and term unchanged. Some investors see a long lease to a public body as an advantage. A buyer who wants vacant possession will not be able to proceed until the term ends.

The government body takes on the internal repairing obligation and the condition of the property for the term. You remain responsible for the structure, buildings insurance and anything that arises from owning the building rather than from it being occupied.

If you have not signed a commercial lease before, yes. RentPromise takes you through the document clause by clause and answers any question you have, but you are entitled to independent advice and we would encourage it for a commitment of this length.

See what your property would be offered

Free survey and valuation, and a written offer setting out the rent, the term and which body would be taking the lease. No obligation.

Get a Rent Offer

Or call us on (612) 123 - 4456 78 to talk it through first.t

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