Answers · Leaseback lease terms
What does the lease typically cover in a sale and leaseback?
Direct answer
A sale-and-leaseback lease typically sets out the initial term and any options to renew, how and when rent reviews occur, which party is responsible for outgoings and repairs, and the make-good obligations at lease end. These terms shape how secure and predictable the arrangement will feel over its life, so they matter as much as the sale price.
The term and options determine how long you're guaranteed occupation — a longer initial term with further renewal options gives more certainty than a short term with no options. Rent review mechanics (fixed, CPI-linked, market, or a mix) determine how the ongoing cost moves over time, and whether there's a ratchet preventing rent from ever falling.
Responsibility for outgoings and repairs is usually addressed through the net-versus-gross lease structure, and typically sits largely with the tenant in an industrial leaseback, consistent with how industrial leases are generally structured. Make-good sets what condition you need to return the premises in at the end — a material cost to plan for, especially where there's been significant fit-out.
None of these terms are fixed by convention alone — they're negotiated at the outset of the leaseback, alongside the price. Since the lease is what actually governs the relationship for years afterward, it's worth as much attention as the number on the contract of sale, and worth having your own solicitor review before you sign.
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